Latest news with #Keller-Sutter
Reuters
2 days ago
- Business
- Reuters
Breakingviews - How UBS and Switzerland can come to terms
LONDON, June 18 (Reuters Breakingviews) - Switzerland is at a crossroads. Two years ago, politicians bent over backwards to help UBS (UBSG.S), opens new tab buy Credit Suisse, partly on the grounds that a failure would imperil the Alpine nation's status as banking hub. In 2025, the same leaders are calling for an extra $24 billion of equity from the enlarged giant, which could erode Zurich's status in another way by prompting UBS to take its $1.5 trillion balance sheet elsewhere. Yet a compromise, to stop the twin extremes of UBS moving or a ruinous bank bailout, looks within reach. Finance Minister Karin Keller-Sutter in 2023 controversially gave UBS significant sweeteners for the Credit Suisse deal, including a government loss guarantee, which Chair Colm Kelleher ultimately didn't need. Now, she wants, opens new tab the bank to fully deduct the value of foreign subsidiaries from the parent bank's common equity Tier 1 (CET1) capital. Keller-Sutter has grounds to insist on unusually high capital ratios. UBS's assets dwarf Switzerland's $950 billion GDP. It also has a large U.S. business, which arguably makes it prudent to have enough equity to withstand any writedowns to overseas operations. The current rules, along with other more bank-specific carveouts, meant that Credit Suisse's capital ratios were more fragile than they seemed in the runup to its rescue, undermining its ability to sort out a perennially loss-making investment bank. It's possible, at least in theory, that something similar could happen to UBS one day. Still, Kelleher and his CEO Sergio Ermotti can legitimately say that the new rules make their bank much less appealing to investors. The government's wider package of measures will by 2030 create a de facto 17.2% minimum CET1 ratio for the listed holding company, compared with 14% absent the planned changes, using UBS's estimates. That erodes returns. In May, before the government released its proposals, analysts expected $11.9 billion of annual earnings and $76 billion of regulatory capital by the end of 2027, implying a 15.7% return on CET1. Raising the capital level to 17.2% would shrink the result to 13.7%. Morgan Stanley's (MS.N), opens new tab equivalent return that year will exceed 19%, according to Breakingviews calculations using Visible Alpha data. What happens next is down to lawmakers in Switzerland's parliament, who will decide whether to approve the rules, or water them down. That process runs slowly. UBS may not decisively know their thinking until the end of 2026. One consideration is whether the bank is exaggerating the pain of the hit. Stock analysts reckon there are several billion dollars of spare capital in UBS's foreign subsidiaries. Keller-Sutter's number crunchers say the bank can shrink the de facto CET1 minimum below 15% through measures such as so-called repatriation, which involves pulling money out of the overseas units to shrink the capital required to back them. That lower number is close to Morgan Stanley and JPMorgan's (JPM.N), opens new tab CET1 levels, the government points out. Another possibility doing the rounds in Zurich is that UBS could use more leverage at its listed holding company to offset the capital trapped lower down in the corporate hierarchy. Finally, a six-to-eight-year transition period dilutes the intensity of the capital pain now. Ermotti and Kelleher have some strong possible counter-arguments, though. It would be perverse to partially solve a leverage issue at one set of subsidiaries by borrowing more at another level. Moreover, the government's international comparison mixes apples and oranges. Keller-Sutter's team benchmarks UBS's requirements against the 15% to 16% levels of Morgan Stanley and other American rivals, which are tangibly higher than what U.S. regulators order them to hold. Morgan Stanley's actual regulatory minimum is 13.5%. The basic fact is that UBS could have a meaningfully lower minimum equity ratio, and therefore higher returns and even share price, if it was based elsewhere. Those numbers add weight to an implicit threat: UBS could move its headquarters to New York or London if parliament sides with the government. The bank's growth opportunities are predominantly outside Switzerland. The planned rules make U.S. expansion costly, in capital terms. It's not a stretch to imagine that Kelleher, a former Morgan Stanley executive, would prioritise global expansion over local loyalties. If his old shop or JPMorgan lobbed in a bid, offering another way to switch domicile, he might listen. Switching HQ could create a meaningful tax bill under local laws and raise questions about whether UBS's additional Tier 1 (AT1) debt would be eligible under U.S. regulations. The bank also could lose any clients who like the fact that UBS is neither American nor British. Yet the conservative lawmakers, which currently constitute the biggest grouping in parliament, will also be acutely aware of the risk of going from having two globally relevant banks a few years ago to none. That could represent a big blow in a country where banking accounts, opens new tab for 5% of GDP. Yet the biggest reason a compromise is possible is that there are ways to fudge the Keller-Sutter plan while retaining its essence. Allowing UBS to cover the foreign subsidiaries' value with AT1 capital as well as CET1, for example, would still arguably protect the parent bank's equity. Letting all outstanding AT1s count for these purposes could cut the CET1 ask to just $5 billion rather than $24 billion, JPMorgan analysts have calculated. That might be too small for comfort, but lawmakers could in theory split the difference by saying that AT1s can cover 20% of the capital, with CET1 accounting for the rest. Doing so would imply $15 billion of extra CET1, or about two-thirds of the current ask, and imply a 15% de facto minimum requirement according to Breakingviews calculations. It might not be a satisfying outcome for capital purists, particularly after the controversial Credit Suisse AT1 writedown tainted the funky hybrid securities, but Swiss supervisors are already working to make those securities absorb losses more readily in a crisis. Kelleher and Ermotti have some leverage by virtue of the possible HQ move, but time is not on their side. UBS faces 18 months or more of capital uncertainty and its shares, off 20% since late January, could fall further if investors get jittery. Lawmakers preoccupied with avoiding a future bank failure, in contrast, will want to take their time. Yet they should remember that while Credit Suisse's rickety capital structure didn't help, it ultimately went bust because wealthy clients mistrusted its ropey business model. As such, hitting UBS's returns carries risks as well as rewards. Follow Liam Proud on Bluesky, opens new tab and LinkedIn, opens new tab.
Hamilton Spectator
4 days ago
- Sport
- Hamilton Spectator
Swiss President's message to UEFA Women's EURO 2025 fans in heartwarming new video: Even if you lose, you win in Switzerland
ZURICH, Switzerland, June 16, 2025 (GLOBE NEWSWIRE) — Next month, Switzerland is hosting UEFA Women's EURO 2025. For the first time, the president of a host nation has addressed the fans of a major event directly, declaring their support for the sport and all the teams competing. This morning, the Swiss president Karin Keller-Sutter released an official video which sends a clear message: Switzerland attaches great importance to UEFA Women's EURO 2025 and the role the host nation has to play. 'In Switzerland, even if you lose, you win' Keller-Sutter's message to football fans is one of positivity and optimism, as she points out 'wouldn't it be a pity to miss all this' before revealing to the viewers some of the host nation's best attributes, accompanied by beautiful on-screen visuals. What is the upside of losing UEFA Women's EURO 2025? The earlier a team goes out of the tournament, the more time they'll have to enjoy being in Switzerland! A female president supporting women in sport Karin Keller-Sutter serves as President of the Swiss Confederation this year, a role that rotates annually between the seven members of the Swiss Federal Council. Recently named by Financial Times as one of the '25 most influential women of the year' alongside prominent female figures ranging from Beyoncé to Ursula von der Leyen, Keller Sutter's landmark decision to record an official video of support is both a display of female empowerment and reflection on the office she holds. Switzerland, represented by its female president, is committed to women in sport and the growing significance of women's football. Football firsts and new records for Switzerland UEFA Women's EURO is being held in Switzerland for the first time and has already been breaking records before the tournament has even begun. Over 500,000 tickets have been sold – more than ever before at this stage at a women's European tournament. So far, two thirds of tickets have been bought by fans from Switzerland, followed by Germany, England, France and the USA. The tournament kicks off on 2 July with two matches: Iceland vs Finland at 5pm in Thun and Switzerland vs Norway at 8pm in Basel. Reigning champions England will play their first game against France on Saturday 5 July at 8pm in Zurich, while Wales will play against The Netherlands on the same day at 5pm in Lucerne. Matches will be played in eight host cities – Basel, Bern, Geneva, Lucerne, Sion, St. Gallen, Thun and Zurich – with the final taking place on 27 July in Basel. Switzerland will write a new chapter in football history this year and will make UEFA Women's EURO 2025 even more memorable by offering visiting football fans a wide range of experiences before, during and after the tournament. It will also set new standards in terms of sustainability, with the Swiss rail network SBB providing over 300 extra trains across Switzerland and free-of-charge return travel to football matches (within Switzerland) for all ticket holders on match days. Note to editors Links Contact Markus Berger, Head of Corporate Communications, Switzerland Tourism +41 (0)44 288 12 70 | News release and further information can be found at: About Switzerland Tourism Switzerland Tourism is the Swiss national tourist board responsible for promoting Switzerland as a premier holiday and business destination. Headquartered in Zurich, Switzerland Tourism is present in 23 markets worldwide, employing around 270 people. Its UK and Ireland office is in London. About Karin Keller Sutter Abroad, Karin Keller Sutter is often referred to simply as the 'Swiss President' for the sake of convenience. However, Switzerland's government is structured as a collegial body, the Federal Council, consisting of seven members of equal standing. Together they form the executive branch, with each councillor heading a federal department. The President of the Confederation chairs the meetings of the Federal Council. The presidency rotates annually. Elected in 2018, Karin Keller-Sutter has headed the Federal Department of Finance since 2023. In the same year, she was named one of the '25 most influential women of the year' by the British Financial Times — appearing on a list alongside figures such as Beyoncé and Ursula von der Leyen. 'Knowledge, courage and determination are perhaps the most important qualities in a politician — and to me, Karin embodies all of them,' wrote Swedish Finance Minister Elisabeth Svantesson at the time, referring to her Swiss counterpart. The active involvement of the President of the Confederation in support of UEFA Women's EURO 2025 highlights the growing significance of women's football and reflects the importance Switzerland attaches to hosting this European championship.
Yahoo
09-06-2025
- Business
- Yahoo
Swiss proposal mandates UBS to boost capital by $26bn
The Swiss government has proposed new capital norms, requiring UBS to increase its core capital by $26bn following its acquisition of Credit Suisse. This move aims to enhance financial stability and prevent future banking crises. The proposed regulations would mandate UBS to fully capitalise its foreign subsidiaries, reported Reuters. UBS has been given a timeframe of six to eight years to comply once the legislation is enacted. However, UBS has expressed strong opposition to the capital requirement, labelling it "extreme" and misaligned with international standards. The government indicated that the new capital requirements would allow UBS to reduce its Additional Tier 1 (AT1) bond holdings by $8bn. Currently, UBS is only required to capitalise 60% of its foreign units, with the option to use AT1 debt to meet some of its capital needs. UBS executives have raised concerns that the additional capital requirements could hinder the bank's competitiveness and impact Switzerland's status as a financial hub. The proposal follows the collapse of Credit Suisse in 2023, which prompted Swiss officials, including Finance Minister Karin Keller-Sutter, to advocate for stricter regulations to safeguard taxpayers and the economy. Keller-Sutter, who currently holds Switzerland's rotating presidency, stated that the measures are essential for the stability of the financial sector. The federal council plans to present draft proposals for stakeholder consultations in the latter half of 2025, with parliamentary approval required before the laws can take effect in 2028. However, separate ordinances could be implemented as early as 2027. UBS's Common Equity Tier 1 (CET1) capital ratio may need to rise from 14.3% to as high as 17%, surpassing that of major global competitors. UBS has indicated that it disagrees with the proposed capital increase, which it claims would necessitate holding approximately $24bn in additional CET1 capital. The Swiss government has also proposed reforms to strengthen the market regulator FINMA and improve banks' access to liquidity from the Swiss National Bank. Last month, UBS Group agreed to pay $511m to settle a US investigation into its subsidiary, Credit Suisse Group, for facilitating tax evasion among wealthy Americans. "Swiss proposal mandates UBS to boost capital by $26bn" was originally created and published by Private Banker International, a GlobalData owned brand. The information on this site has been included in good faith for general informational purposes only. It is not intended to amount to advice on which you should rely, and we give no representation, warranty or guarantee, whether express or implied as to its accuracy or completeness. You must obtain professional or specialist advice before taking, or refraining from, any action on the basis of the content on our site.
The Hindu
09-06-2025
- Business
- The Hindu
Shaken by crises, Switzerland fetters UBS's global dream
Switzerland announced reforms on Friday to make its biggest bank UBS safer and avoid another crisis, hampering the global ambitions of a lender whose financial weight eclipses the country's economy. UBS emerged as Switzerland's sole global bank more than two years ago after the government hastily arranged its rescue of scandal-hit Credit Suisse to prevent a disorderly collapse. The demise of Credit Suisse, one of the world's biggest banks, rattled global markets and blindsided officials and regulators, whose struggle to steer the lender as it lurched from one scandal to the next underscored their weakness. On Friday, speaking from the same podium where she had announced the Credit Suisse rescue in 2023 as finance minister, Switzerland's president Karin Keller-Sutter delivered a firm message. The country would not be wrongfooted again. "I don't believe that the competitiveness will be impaired, but it is true that growth abroad will become more expensive," Keller-Sutter said of UBS. "We've had two crises. 2008 and 2023," she said. "If you see something that is broken, you have to fix it." During the global financial crisis of 2008, UBS was hit by a losses in subprime debt, as a disastrous expansion into riskier investment banking forced it to write down tens of billions of dollars and ultimately turn to the state for help. Memories of that crisis also linger, reinforcing the government's resolve after the collapse of Credit Suisse. For UBS, which has a financial balance sheet of around $1.7 trillion, far bigger than the Swiss economy, the implications of the reforms proposed on Friday are clear. Switzerland no longer wants to back its international growth. "Bottom line: who is carrying the risk for growth abroad?" said Keller-Sutter. "The bank, its owners or the state?" The rules the government proposed demand that UBS in Switzerland holds more capital to cover risks in its foreign operations. That move, one of the most important steps taken by the Swiss in a series of otherwise piecemeal measures, will make UBS's businesses abroad more expensive to run for one of the globe's largest banks for millionaires and billionaires. Following publication of the reform plans, UBS Chairman Colm Kelleher and CEO Sergio Ermotti said in an internal memo that if fully implemented, they would undermine the bank's "global competitive footprint" and hurt the Swiss economy. Strategy The reform would require UBS to hold as much as $26 billion in extra capital. Some believe the demands may alter the bank's course. "It could be that UBS has to change its strategy of growth in the United States and Asia," said Andreas Venditti, an analyst at Vontobel. "It's not just growing. It makes the existing business more expensive. It is an incentive to get smaller and this will most likely happen." Credit Suisse's demise exploded the myth of invincibility of one of the wealthiest countries in the world, home to a global reserve currency, and proved as unworkable a central reform of the financial crisis to prevent state bailouts. For many in Switzerland, the government's reforms are long overdue. "The bank is bigger than the entire Swiss economy. It makes sense that it should not grow even bigger," said Andreas Missbach of Alliance Sud, a group that campaigns for transparency. "It is good that the government did not give in to lobbying by UBS. The question is whether it is enough. We have a banking crisis roughly every 12 years. So I'm not really put at ease." UBS CEO Ermotti had lobbied against the reforms, arguing that a heavy capital burden would put the bank on the back foot with rivals. The world's second-largest wealth manager after Morgan Stanley is dwarfed by its U.S. peer. Morgan Stanley shares value the firm at twice its book value, compared with UBS's 20% premium to book. On Friday, the bank reiterated this message, saying that it strongly disagreed with the "extreme" increase in capital. But others are sceptical that the government has done enough. Hans Gersbach, a professor at ETH Zurich, said there was still no proper plan to cope should UBS run into trouble. "The credibility of the too big to fail regime remains in question."
Yahoo
06-06-2025
- Business
- Yahoo
Analysis-Shaken by crises, Switzerland fetters UBS's global dream
By Ariane Luthi and John O'Donnell BERN (Reuters) -Switzerland announced reforms on Friday to make its biggest bank UBS safer and avoid another crisis, hampering the global ambitions of a lender whose financial weight eclipses the country's economy. UBS emerged as Switzerland's sole global bank more than two years ago after the government hastily arranged its rescue of scandal-hit Credit Suisse to prevent a disorderly collapse. The demise of Credit Suisse, one of the world's biggest banks, rattled global markets and blindsided officials and regulators, whose struggle to steer the lender as it lurched from one scandal to the next underscored their weakness. On Friday, speaking from the same podium where she had announced the Credit Suisse rescue in 2023 as finance minister, Switzerland's president Karin Keller-Sutter delivered a firm message. The country would not be wrongfooted again. "I don't believe that the competitiveness will be impaired, but it is true that growth abroad will become more expensive," Keller-Sutter said of UBS. "We've had two crises. 2008 and 2023," she said. "If you see something that is broken, you have to fix it." During the global financial crisis of 2008, UBS was hit by a losses in subprime debt, as a disastrous expansion into riskier investment banking forced it to write down tens of billions of dollars and ultimately turn to the state for help. Memories of that crisis also linger, reinforcing the government's resolve after the collapse of Credit Suisse. For UBS, which has a financial balance sheet of around $1.7 trillion, far bigger than the Swiss economy, the implications of the reforms proposed on Friday are clear. Switzerland no longer wants to back its international growth. "Bottom line: who is carrying the risk for growth abroad?" said Keller-Sutter. "The bank, its owners or the state?" The rules the government proposed demand that UBS in Switzerland holds more capital to cover risks in its foreign operations. That move, one of the most important steps taken by the Swiss in a series of otherwise piecemeal measures, will make UBS's businesses abroad more expensive to run for one of the globe's largest banks for millionaires and billionaires. Following publication of the reform plans, UBS Chairman Colm Kelleher and CEO Sergio Ermotti said in an internal memo that if fully implemented, they would undermine the bank's "global competitive footprint" and hurt the Swiss economy. STRATEGY The reform would require UBS to hold as much as $26 billion in extra capital. Some believe the demands may alter the bank's course. "It could be that UBS has to change its strategy of growth in the United States and Asia," said Andreas Venditti, an analyst at Vontobel. "It's not just growing. It makes the existing business more expensive. It is an incentive to get smaller and this will most likely happen." Credit Suisse's demise exploded the myth of invincibility of one of the wealthiest countries in the world, home to a global reserve currency, and proved as unworkable a central reform of the financial crisis to prevent state bailouts. For many in Switzerland, the government's reforms are long overdue. "The bank is bigger than the entire Swiss economy. It makes sense that it should not grow even bigger," said Andreas Missbach of Alliance Sud, a group that campaigns for transparency. "It is good that the government did not give in to lobbying by UBS. The question is whether it is enough. We have a banking crisis roughly every 12 years. So I'm not really put at ease." UBS CEO Ermotti had lobbied against the reforms, arguing that a heavy capital burden would put the bank on the back foot with rivals. The world's second-largest wealth manager after Morgan Stanley is dwarfed by its U.S. peer. Morgan Stanley shares value the firm at twice its book value, compared with UBS's 20% premium to book. On Friday, the bank reiterated this message, saying that it strongly disagreed with the "extreme" increase in capital. But others are sceptical that the government has done enough. Hans Gersbach, a professor at ETH Zurich, said there was still no proper plan to cope should UBS run into trouble. "The credibility of the too big to fail regime remains in question." (Additional reporting by Dave Graham and Oliver Hirt in Zurich; Writing By John O'Donnell; editing by David Evans)
