UBS: Less equity thanks to legal trick

The Federal Council is demanding that UBS significantly increase the equity capital of its foreign subsidiaries to strengthen their security, reports the "NZZ am Sonntag." The bank with the three keys opposes this rule, which it describes as "extreme." At the same time, it has begun to optimize its capital requirements abroad. For example, UBS has transferred activities from its British subsidiary to a branch. In doing so, the leading Swiss bank needs to hold less equity. UBS is applying the same trick in the UK as the major French bank BNP Paribas in Switzerland. The latter recently converted its Swiss subsidiary into a branch. This also saves capital and gives it an advantage over Swiss banks.

Several sources criticize the Swiss Financial Market Supervisory Authority (FINMA) for allowing BNP Paribas to operate here only as a branch. This distorts competition, experts believe, as the French bank can then offer loans to Swiss companies on more favorable terms than local banks, which are subject to stricter regulations.

According to a list published by Finma, other major foreign banks operate in Switzerland through branches, including the US-based Citigroup, Bank of America, JPMorgan Chase, Morgan Stanley, and the Chinese Bank of China. These banks benefit from the fact that the Swiss regulator is more lenient with them than their own regulators are with Swiss banks. In the US and China, major Swiss banks can only operate through subsidiaries, not branches. Switzerland, however, does not require reciprocity. Bankers are calling for a review of this system and demanding equal treatment.