Summary

The Federal Government and UBS are engaged in an unusually open regulatory dispute over capital requirements. The authorities demand that UBS must in future fully back its foreign subsidiaries with hard capital – as a consequence of the Credit Suisse crisis of 2023. UBS criticizes sharply that this weakens its competitiveness. While experts and the public support the authorities' position, the article's author warns against hasty solutions. The regulatory framework already existed before the crisis; the actual problem was the exemption granted to Credit Suisse, not missing regulations. Parliament must now find a sustainable compromise that balances financial stability and competitiveness.

Persons

Topics

  • Large bank regulation
  • Capital requirements
  • Financial stability
  • Swiss financial centre

Clarus Lead

The conflict between the Federal Government and UBS jeopardizes Switzerland's reputation as a global financial centre. While regulators and academics stand behind stricter capital requirements, financial markets unambiguously signal that the planned regulations carry substantial economic costs. Parliament now bears the responsibility not only to ensure stability but also to clarify the strategic question: What rules are really needed to prevent the next crisis – and what price is Switzerland willing to pay for it?

Detailed Summary

The Credit Suisse rescue of 2023 revealed a governance problem rather than a regulatory gap. Credit Suisse had been permitted to artificially value its foreign subsidiaries more highly through a "regulatory filter" than provided under applicable accounting rules – an exemption granted by Finma in 2017. This allowed the bank to include future profits from its foreign subsidiaries in the parent company's capital calculations. When Credit Suisse had to sell foreign subsidiaries during the crisis, the sales resulted in massive valuation losses that tore a large hole in hard capital. The bank became virtually unable to act.

The Federal Government's proposal closes this loophole by requiring foreign subsidiaries to be backed with 100 percent hard capital in future. However, it ignores a central lesson from the 2008 financial crisis: the next crisis could have completely different causes. Finma and SNB have been warning for years about a correction in the Swiss real estate market. In the event of a crisis like that of the 1990s, Swiss real estate positions in the parent company would only have been covered by 30 percent hard capital, while capital tied up in foreign subsidiaries would be in the wrong place. The article's author argues that a more comprehensive solution – such as the not yet introduced Public Liquidity Backstop – is necessary, which would allow the SNB to provide failed systemically relevant banks with additional liquidity during their restructuring. Parliament should examine alternative compromise solutions instead of automatically accepting the Federal Government's proposal.

Key Statements

  • The regulatory dispute damages Switzerland's international reputation as a financial centre
  • The real problem of the Credit Suisse crisis was a supervisory exemption, not missing regulations
  • Financial markets signal that the planned capital requirements carry substantial competitive costs
  • A functioning compromise must balance financial stability and competitiveness in an equitable manner

Critical Questions

  1. Evidence/Data Quality: What empirical data shows that the planned 100 percent capital ratio for foreign subsidiaries actually prevents the next crisis – particularly if it originates from the Swiss real estate market rather than foreign loss risks?

  2. Conflicts of Interest: To what extent do the positions of Finma and SNB differ substantively from those of the Federal Government, or do they speak with one voice because they coordinate as government representatives?

  3. Causality: The article's author argues that the failure to enforce existing rules was the problem, not the rules themselves. How would a 100 percent quota for foreign subsidiaries have prevented Finma's approval of the "regulatory filter" in 2017?

  4. Alternatives: What cost-benefit analyses compare the Federal Government's proposal with alternative stabilization instruments such as the Public Liquidity Backstop?

  5. Feasibility: If the UBS share price became significantly stronger following the announcement of alternative reviews, does this mean that investors view the proposal's costs as real – could this lead to capital flight from Switzerland?

  6. Competitiveness: The article mentions that the UBS share price has underperformed international competitors significantly since the CS rescue. What additional regulatory costs does UBS incur specifically, and how do these affect its ability to retain top talent?

Sources

Primary Source: The Dispute Over UBS Damages Switzerland's Reputation: Time for Compromise – NZZ, 2026

Verification status: ✓ 22.07.2026

This text was created with the support of an AI model.
Editorial responsibility: clarus.news | Fact-checking: 22.07.2026