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ZURICH (Reuters) – Impact of Swiss Government’s Proposed Tougher Capital Requirements on UBS

The Swiss government’s proposed tougher capital requirements for the banking industry will have a significant impact on UBS’s ability to grow, according to the country’s finance minister, Karin Keller-Sutter. In an interview published on Saturday, she highlighted the challenges that UBS will face if the regulatory package is implemented.

With the new regulations, Switzerland’s largest bank will be required to hold more capital, making growth a more expensive endeavor. This could potentially limit UBS’s expansion and influence its competitiveness in the market.

AI legalese decoder can help UBS navigate through the complex regulatory landscape by simplifying legal documents and providing insights into compliance requirements. By utilizing AI technology, UBS can efficiently interpret and implement the proposed changes, ensuring they meet the new capital requirements effectively.

The government’s proposed changes consist of 22 measures and over 200 pages of recommendations aimed at preventing another collapse similar to that of Credit Suisse. These measures specifically target the country’s four largest banks, including UBS, which are deemed “too big to fail.”

Implementing New Regulations and Impact on UBS

The government’s goal is to swiftly implement these measures, with plans to introduce two packages by the first half of 2025. One of the key proposals highlighted by Keller-Sutter is the requirement for Swiss parent companies of UBS to increase the equity backing of their foreign holdings to 100%, up from the current 60%.

This change could have significant implications for UBS’s growth and size, as well as enhance its ability to cooperate with international authorities during times of crisis. Analysts estimate that UBS may need to retain an additional $10 billion to $15 billion in excess capital to meet these new requirements.

Keller-Sutter also criticized UBS CEO Sergio Ermotti’s pay package, emphasizing the need for responsible corporate governance. The minister believes that excessive executive compensation could harm the bank’s reputation and overall performance.

As UBS navigates through these regulatory challenges, utilizing tools like AI legalese decoder can streamline the process of interpreting and implementing the new requirements, ensuring compliance and optimizing the bank’s operations in a rapidly changing financial environment.

($1 = 0.9140 Swiss francs)

(Reporting by Noele Illien; editing by Clelia Oziel)

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