Switzerland says UBS may need more cash. The bank is fuming – CNN

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A year later Credit Suisse goes bankrupt, Swiss government announces UBS may have to find out Up to $27 billion to absorb potential This is to ensure that taxpayers don’t have to bail out the big banks as they suffer losses.

Now, Switzerland’s biggest financial institutions are fighting back, insisting that Switzerland’s finances are strong and warning that the proposal could undermine Switzerland’s status as a global financial center.

UBS chairman Colm Kelleher told Wednesday’s annual general meeting that he was “gravely concerned” about current discussions that could force the bank to hold more cash and other liquid assets. Stated. “Additional capital is the wrong cure,” he said.

“There is no regulatory solution to a broken business model,” he continued, referring to Credit Suisse. UBS acquired its battered rival last March in a government-backed bailout aimed at averting a global crisis. economic crisis.

transaction proved controversial in switzerlandis now home to a bank with assets nearly twice the size of annual economic output.

Kelleher said the agreement “strengthens Switzerland’s position as a leader in asset management.”

He stressed that UBS is “not too big to fail” and is “one of the best-capitalized banks in Europe” with the financial resources to absorb more than $200 billion in losses.

“You can’t regulate trust. It wasn’t that capital requirements were too low that forced Credit Suisse into its historic weekend bailout,” he added.

The proposed regulations announced earlier this month are giving analysts and shareholders reason to reconsider the potential benefits UBS could derive from regulation. Biggest banking transaction in history.

The bank’s share price has fallen more than 9% since the Swiss government issued the recommendations as part of its report on the stability of the banking sector, and the bank has lost some of its extraordinary profits, which had risen significantly since the deal was announced a year ago. I cut it down.

Swiss Finance Minister Karin Keller Keller-Sutter was asked whether the proposed measures would require UBS to hold additional capital of between 15 billion and 25 billion Swiss francs ($16.4 billion to $27.3 billion). Regarding this, he said: The Tages-Anzeiger newspaper said this month that such an estimate was “plausible”.

Anke Reingen, a banking analyst at RBC Capital Markets, wrote in a note Tuesday that UBS shareholders’ concerns are “warranted.”

In general, investors are concerned because the more banks increase their retained capital, the less money they have to return to shareholders and increase profits.

UBS enjoys a strong reputation in the market, with its stock price rising more than 40% over the past year. However, Citi analyst Andrew Coombs suggested that this leaves the stock vulnerable to declines as a result of the “execution risks of the Credit Suisse merger.” He added that the proposed new regulations created “greater uncertainty” in stock prices.

Mr Kelleher on Wednesday reiterated the benefits of the deal, but acknowledged there was still a “long way to go” to make it a success.

He noted that the transaction would add seven to 10 years’ worth of internal growth in client assets and “solidify” UBS’s position as the “preeminent global asset manager.”

“However, to maintain this competitiveness, it is essential that our regulatory policies ensure a level playing field,” he added. “In other words, Swiss regulations must remain broadly consistent with global standards.”

Kelleher also defended UBS CEO Sergio Ermotti’s 2023 pay package, which drew considerable criticism from shareholders. “He had arguably the toughest job in the global financial services industry and he did it,” he said.

Ermotti will earn 14.4 million Swiss francs ($15.9 million) in 2023, making him Europe’s highest-paid bank CEO, according to Reuters.