“It needs 20 percent equity”

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How much equity should a large bank report? How much risk can she take for profit? For 15 years, the left failed to gain strength here due to civil resistance. With Central President Gerhard Pfister (60) announcing and explaining his change of mind in an interview with SonntagsBlick, the political majority on this issue could now change. But the back pressure is already programmed – and with it the debate over the regulation of the financial center.

SonntagsBlick: Mr. Pfister, since last Sunday, after a spectacular rescue by UBS, Switzerland has one big bank less. Your numbers for politics?

Gerard Pfister: Credit must be given to those responsible for achieving something, namely that no international banking crashes have occurred from Switzerland. Much has been subordinated to this goal. But something irritated me at the media conference on Sunday night.

What do you mean?

I noticed that two groups were barely mentioned: Credit Suisse customers and employees. I find it remarkable that when making such a difficult decision, the focus is completely on the technical side, on the financial markets, but not on the people affected by it. You absolutely should have – whether it was Federal Councilman Keller-Sutter or the heads of CS or UBS.

Are you otherwise satisfied with the procedure?

As a parliamentarian, you ask yourself a number of questions. We were always told that the current regulations are enough, and now you see that it just wasn’t enough.

You mean the too big to fail legislation.

I remember very well that after the UBS rescue in 2008 we were told: that will not happen again…

Who is “man”?

Naturally, the CS management caused this debacle. But the regulator is also responsible, ie the regulator, the National Bank, the Federal Council. I say: if there is the political will to ensure that something like this does not happen again, then there must be laws to prevent it. I think the public wants to know what we are doing, so that after 2008 and 2023 we don’t have to bail out a big bank for the third time.

And a much bigger company.

A structure that was judged by many to be “too big to save”. Would we still be able to handle something like that? It’s tax money. In Parliament we sometimes fight hard over a few hundred thousand or a million francs. And then overnight 209 billion Swiss francs will soon be released by the emergency law. This threatens credibility damage for business and politics.

Do you hope that all this will change the attitude on the carpet floors?

On Sunday the state is demonized and on Monday it is invoked. That mentality no longer works and that is why I appeal to those responsible in business to express themselves in a more differentiated way about the role of the state in the future. The arrogance of certain bankers who want to play with other people’s money at the top of the world does not work. It was with great satisfaction that I heard the president of UBS say that a good banker must be boring. And I sincerely hope that the big UBS remains very boring. Because a boring sofa is a solid sofa. But if the people at the top are not up to the task, even the strictest regulations will not help.

Which brings us back to keyword regulation. How should this be changed to avoid the next major bank collapse?

The declared equity is central to me. If you want to buy an apartment, you have to put in 20 percent of the capital yourself before the bank is even willing to take the risk for a mortgage. I am convinced that a high equity ratio for banks will replace many regulatory requirements and provide the right incentives.

However, according to critics, this would limit competitiveness.

In today’s world, solid equity is what customers want. Too little equity entails risks that we can no longer expect from the taxpayer. Low equity is a false incentive to take on more risk so that the short-term return on equity is higher. The executive floors in turn justify the high bonuses. When things go wrong, the taxpayer has to step in. Therefore, I am convinced that the core of the problem is the lack of equity. The disadvantage of the regulations is that they actually regulate around the risk, but do not get to the core of the risk.

Today, financial institutions are required to have equity capital of five percent of their total assets. What are you requesting?

A net worth of 20 percent is required, which is considered reasonable by several reputable experts.

Your change of position is remarkable. The left has long demanded this, but has never found a majority due to resistance from the bourgeoisie.

In politics, we must stop rejecting an idea simply because it comes from a political opponent.

So the request didn’t have a majority because it came from the left?

That was probably due to the sender. Of course there are already stakeholders lobbying against it, but now we need to monitor the well-being of the country in an impartial way. I expect all parties to jump over their own shadow if necessary. As an elected parliamentarian and party chairman, I am accountable to my constituents and my country, so I cannot say that I have not made a mistake.

Conversely, you accuse the Mitte, FDP and SVP of being wrong for the past 15 years. That is not very conducive to the so-called solidarity in the election year.

I find this shoulder-to-shoulder discussion, this blocky attitude no longer relevant. In my opinion, anyone who, as a bourgeoisie, says that he has made no mistakes is making the same mistake that he accuses the CS leadership of.

FDP President Thierry Burkart and SVP National Councilor Thomas Matter want to separate CS Switzerland and save it as a separate bank. Your opinion?

We agree that UBS has reached critical mass. However, if you separate the Swiss part, UBS isn’t that much smaller. And could politics even force UBS to do so? But we need to discuss all options, including the dual banking system. Moreover, if UBS continues to be such a behemoth, politicians will put regulatory shackles on it…

… a Lex UBS.

Right, then there will be a Lex UBS. Then the bank will probably think twice about whether to give up its size or put up with Switzerland’s regulations to ensure that this bank does not ever have to be bailed out at the taxpayer’s expense.

Money is being demanded from the former CS managers. Do you support that?

I think it would be very sensible and decent for the highly paid managers to voluntarily pay something back. If this does not happen, what can be done legally should be explored. As I said, it’s about public confidence in business and politics.

Source:Blick