The head of the Swiss Bankers Association has suggested that Switzerland’s financial institutions could relocate in the near future, if the reforms being debated by parliament are enacted. Roman Studer suggested that the extra regulations being imposed on banks following the Credit Suisse crisis put them at a major disadvantage.
Swiss banks brace for new regulations following Credit Suisse crisis
Speaking at an interview with the Tages-Anzeiger, Studer said that larger Swiss banks like UBS would have to consider leaving Switzerland if the industry is subject to stricter rules. He argued that the government has presented companies with a “wave of regulations” that will make them less competitive in future.
The measures mentioned are the response to the Credit Suisse crisis of 2023, when the government bailed out the bank and facilitated its takeover and eventual merger with UBS. The Federal Council has since proposed 29 different measures designed to prevent such a crisis from happening again, while parliament is currently in the midst of debating the recommendations made by the official government enquiry.
Finance Minister and President of Switzerland Karin Keller-Sutter (FDP) told reporters, "We must learn the lessons from this crisis. Knowing that the next one may turn out differently." Supporters of the reforms note that Switzerland was lucky in 2023, given that swift action, the willingness of UBS to take over Credit Suisse and a 50-billion franc public bailout were the only things that prevented the crisis from crashing the Swiss economy.
Therefore, they argue that stronger measures are vital to stop the crisis from happening again. Though the measures vary, most of the new proposals involve strengthening government agencies that regulate the financial sector, ensuring more transparency in banks' finances and increasing the amount of money they must hold in reserve, to use in the event of a financial meltdown.
Studer argued that the latter places a huge financial burden on banks both large and small, noting that UBS would have to hold up to 44 billion francs in reserves to comply with the proposed requirements. “This will have consequences…Maximum stability requirements could also mean that UBS would have to consider scenarios such as moving away in the interests of its marketability. There would also be a risk of a takeover.”
“I have the impression that many people are not aware of how much we as an economy are shooting ourselves in the foot with overly strict regulation,” Studer claimed. He argued that instead of rushing into further measures, the government should fine-tune the regulations in place today.
“We want a strong financial centre. This includes strong supervision that is respected... the end of Credit Suisse showed that the supervisory authority did not always make full use of its resources,” Studer concluded.