(Bloomberg) — UBS Group AG should set aside more capital, Swiss National Bank President Thomas Jordan told Neue Zuercher Zeitung.
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“It’s in UBS’s interest that we address the weaknesses identified” by the government, Jordan was cited as saying in an interview published Saturday. “Improvements are required in terms of resolvability, and adjustments are needed on the capital side.”
Speaking less than a month before he retires after more than a decade as Switzerland’s top central banker, Jordan highlighted that the SNB supports the Swiss government’s plans to revamp financial rules in response to the 2023 collapse of Credit Suisse.
Reforms will likely enhance the powers of banking watchdog Finma and raise capital requirements at the country’s biggest bank — UBS — though the overhaul will only be finalized over the next couple of years.
Finma chief Stefan Walter has said he wants the capacity to intervene on banks’ business models before a crisis, as well as to levy fines and veto senior management.
“It’s not like UBS will have to hold additional equity overnight — it would be given enough time to make adjustments,” Jordan told NZZ. “I am convinced that good capital requirements are an advantage for an internationally active bank. An important part of the overall package is strengthening the capital regime for the parent company.”
Jordan highlighted three elements must be ensured:
An accurate valuation of capital;
An adequate distribution of capital between the parent company and subsidiaries so that in a crisis the necessary decisions can be made at group level without causing capital bottlenecks in the parent company;
Convertible capital can be converted legally without any problems.
“All of these were problems that emerged in the Credit Suisse crisis,” he said. “The challenge now is to choose an overall package of corrections that reduces the risks that have emerged and allows UBS to operate successfully” from Switzerland.
Jordan also said:
A narrow mandate ensures that the SNB maintains its independence.
“The SNB should only take on tasks for which it has the necessary instruments. This is not the case with climate protection.”
“By focusing on price stability, the SNB is laying the foundation for parliament and government to better fulfill their duties.”
“If we had delayed easing, inflation would have fallen more quickly and the risk would have increased that we would have to ease much more at a later date.”
There are “no concrete plans yet” on what to do once his term finishes at the end of September.
“From October onwards I will think about what I will do in the future. I have been involved in monetary policy for a long time now. It’s quite possible that I will do something else in the future.”
Early retirement “probably isn’t” in the cards — “but who knows?”
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