ZURICH, Could 30 (Reuters) – Switzerland’s Social Democratic Occasion has drawn up a proposal to shrink UBS (UBSG.S) belongings after its takeover of Credit score Suisse (CSGN.S) to cut back the chance of one other costly state-backed rescue, its lawmaker was quoted as saying on Tuesday.
It was not clear, although, how a lot traction the proposal, which was introduced by Samira Marti in an interview with Swiss newspaper Aargauer Zeitung, can get.
The mixed financial institution may have a steadiness sheet of round 1.5 trillion Swiss francs – roughly double the scale of the Swiss economic system, posing monumental dangers to the nation particularly because it enjoys an implicit state assure, Marti stated.
The left-leaning get together will suggest to cap the financial institution’s belongings at half of Switzerland’s gross home product, successfully forcing the brand new UBS to slash its belongings to 1 / 4 of their present stage.
“That may be a drastic discount, however from the taxpayer’s perspective, it’s a necessity,” she stated.
The initiative first must be submitted to the Swiss cupboard, which is able to make a suggestion earlier than the matter is mentioned in parliament.
Social Democrats are the second-biggest get together within the decrease home, however with solely 39 of the 200 seats will want assist of different events. The Swiss Folks’s Occasion, which has 53 decrease home seats, joined the Social Democrats in rejecting the federal government’s help bundle for the merger final month and has additionally known as for no extra taxpayer-funded bailouts for banks.
Nonetheless, the 2 events would stay in need of a majority and a few analyst described the proposal as unrealistic and extra about tapping into widespread public anger with banks forward of nationwide elections in October.
UBS declined to remark. The lender is anticipated to shut the take care of Credit score Suisse “very shortly,” Chairman Colm Kelleher stated final week.
Beforehand UBS Chief Govt Sergio Ermotti, who was introduced in to steer the mega merger, has dismissed fears the brand new financial institution could be too huge for Switzerland.
“Even placing UBS and Credit score Suisse collectively, we gained’t be on the high of the classification for worldwide banks by way of dimension,” Ermotti informed Italian enterprise day by day Il Sole 24 Ore final month.
He has additionally stated the enterprise mannequin of a financial institution and the dangers it took on was extra necessary than its precise dimension.
An alternate, additionally thought-about by the Social Democrats, could be imposing greater capital necessities if the financial institution’s belongings rose above 50% of Swiss GDP.
Any a part of UBS’s steadiness sheet above that threshold would require an fairness ratio of 30% or extra, Marti stated of her get together’s proposal.
“The purpose is for UBS to turn into smaller,” Marti informed the newspaper. “We now have to make enhancements in order that banks are much less susceptible in a disaster.”
Reporting by John Revill; Enhancing by Edwina Gibbs and Tomasz Janowski
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