UBS Proposes Permanent Cap on Investment Bank to Address Swiss Regulatory Concerns

UBS is negotiating with Swiss regulators to limit the size of its investment bank as a strategy to address concerns over increased capital requirements following its acquisition of Credit Suisse. The bank has proposed a permanent cap on its investment banking division, currently self-limited to 25% of its risk-weighted assets, to mitigate risks and avoid further regulatory backlash. Swiss authorities are pushing for UBS to raise its capital levels significantly, potentially by $25 billion, to ensure the bank can withstand future crises. UBS executives warn that such demands could hinder its competitiveness and potentially lead to relocation outside of Switzerland. CEO Sergio Ermotti expressed frustration over the regulatory challenges, emphasizing the need for a balance that maintains financial stability while allowing for growth. The ongoing discussions reflect the tension between ensuring systemic safety and maintaining the bank's global competitiveness.