(Bloomberg) -- Swiss Finance Minister Karin Keller-Sutter made clear that the current lobbying campaign by UBS Group AG against new capital requirements isn’t going to sway her.
“It’s normal that UBS defends its interests, because upcoming legislation will cost them more,” Keller-Sutter told L’Agefi in an interview Friday, referring to rules proposed by the government that would substantially increase how much capital the bank needs to hold. She still supports the change as “it’s only natural that larger banks should be better capitalized.”
The Swiss government is planning to adopt rules that could see UBS’s capital requirement rise by as much as $25 billion. The move comes in response to last year’s demise of the country’s second-largest lender, Credit Suisse. The subsequent takeover by UBS has turned it into a massive bank, with any failure possibly wreaking financial havoc in Switzerland.
UBS has pushed back hard against the plans, with Chief Executive Officer Sergio Ermotti and Chairman Colm Kelleher arguing that it wouldn’t make the Swiss banking system any safer and fail to address the root causes of the Credit Suisse disaster.
Keller-Sutter made clear the arguments put forward by Ermotti and Kelleher haven’t convinced her.
“The Swiss government has an interest in having a large bank that is doing well, but also to minimize the risk for the taxpayer,” she said in the L’Agefi interview. “We want to make a resolution of UBS possible.”
Keller-Sutter also complimented the bank.
“We must also recognize the impressive work that the specialists at UBS are doing to absorb the former No. 2 bank in the country,” she said.
She favorably compared UBS’s purchase of Credit Suisse — a takeover engineered by the Swiss government that didn’t require the country to inject equity into the bank — to other rescues that ended up with governments holding stakes in lenders.
“Look at the examples of nationalization abroad, in particular that of Commerzbank. The German state, which is its main owner, cannot get rid of it,” she said. “As for the Royal Bank of Scotland, it went bankrupt after being nationalized,” she said, citing two lenders bailed out, in Germany and the UK, during the global financial crisis a decade ago and a half ago.
(Updates with more comments from interview in final three paragraphs.)
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