Up to half of GDP: the SP wants to put the new mega bank on a forced diet

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CHF 1.5 trillion – that’s the total assets of the new mega-UBS. This is equivalent to twice the gross domestic product (GDP) of Switzerland as a whole.

Clearly too great and too great a risk for our country, the SP believes. The party is therefore submitting a new paper with a concrete proposal on how the giant bank should become leaner – the letter is available for inspection at the CH Media newspapers.

Up to 50 percent of GDP

The SP wants to introduce an upper limit for the size of banks. The balance sheet total may not exceed 50 percent of Swiss GDP. UBS would have to be shrunk to a quarter of its current size.

“That would be a drastic reduction,” says SP alderman Samira Marti (29) to CH Media. But this is necessary. Otherwise, the financial risk is unbearable for both the economy and the taxpayer.

As an alternative to the hard cap of 50 percent of GDP, the SP proposes an incentive-based solution. For example, a bank’s capital reserve must increase rapidly as soon as a bank exceeds this 50 percent limit. There is a maximum of 30 percent equity for the part that exceeds the threshold.

A similar question comes from the SVP. They don’t want a Swiss bank too big to fail. This initiative will already be discussed in the summer session of the Council of States.

Risk more important than size?

Because of these very high equity ratios, UBS should be forced to downsize. Because such a high rate is expensive and unattractive for the bank. The SP’s demands will be converted into common law when the UBS-CS deal is adopted from the emergency ordinance. However, this will not happen until September at the earliest. Then the Bundesrat wants to take over the message about the transfer.

Unsurprisingly, UBS sees things differently. “Much more important than the absolute size of a bank are the business model and the risks it takes,” says UBS boss Sergio Ermotti (63). He points out that prior to the 2008 crash, UBS’s balance sheet total exceeded CHF 2.3 trillion. (sq)

Source:Blick