By Noele Illien
BASEL, Switzerland (Reuters) -UBS executives on Wednesday instructed shareholders that the financial institution has main issues in regards to the Swiss authorities’s not too long ago introduced plan to hit the nation’s largest lender with harder capital necessities.
Switzerland’s authorities laid out plans two weeks in the past for methods to police banks deemed “too huge to fail” to defend the nation from a repeat of the collapse of Credit score Suisse. “We’re critically involved about among the discussions associated to extra capital necessities,” UBS Chairman Colm Kelleher stated on the financial institution’s annual normal assembly in Basel.
“Further capital is the unsuitable treatment.”
UBS may want to seek out $15 billion to $25 billion in extra capital to adjust to the proposed new necessities.
The Zurich-based UBS acquired its long-term rival final yr following Credit score Suisse’s meltdown that roiled international monetary markets and stirred fears that the enlarged financial institution may upend the Swiss economic system if it bumped into hassle.
Shares in UBS had been buying and selling down by greater than 2% on Wednesday afternoon, underperforming European friends.
The takeover prompted the federal government to craft a plan aimed toward making the banking system extra strong and to forestall a potential UBS collapse, though the timeline for modifications stays unclear with a protracted legislative course of nonetheless pending.
Regardless of this prospect of harder capital guidelines, Kelleher stated UBS remained dedicated to distributing extra capital to shareholders through dividends and share repurchases.
“UBS just isn’t too huge to fail,” he stated, noting that it was one of many best-capitalized banks in Europe.
take away adverts
.
He stated the purpose is for whole capital returns to exceed pre-acquisition ranges by 2026.
Talking on the assembly, UBS CEO Sergio Ermotti stated the merger of the Swiss entities of the 2 banks ought to happen earlier than the top of the third quarter, and that troublesome selections nonetheless lay forward throughout the Credit score Suisse integration.
“Regardless of our efforts to minimize the affect, within the quick to medium time period we might want to half methods with some colleagues,” Ermotti stated after a weekend media report stated the financial institution was planning 5 rounds of lay-offs within the coming months.
Ermotti’s 14.4 million Swiss franc ($15.75 million) pay for 9 months of 2023, which made him the highest-paid banker in Europe, was closely criticized by a lot of shareholders earlier than a vote was held on the pay bundle.
Kelleher defended the CEO’s pay.
“He arguably has the hardest job within the monetary providers business globally, and he has delivered,” Kelleher stated.
