Swiss banking giant calls for delay in implementation of strict new rules

Banking giant UBS has called for a year's delay to new stringent Swiss capital rules to allow more clarity on international regulation, while striking a more conciliatory note by vowing to keep its base in Switzerland.

Chairman Kaspar Villiger told the bank's annual shareholders' meeting that UBS was not threatening to relocate abroad and was aware of the advantages of being based in Switzerland, but wanted to highlight the risks of tightening rules ahead of other states.

‘It is not clear why Switzerland needs to rush ahead with legislation before we have a better idea of what is really happening internationally. Even in just one year's time we would have a much better idea,’ he said.

‘It is precisely because we are committed to Switzerland as a financial centre that we are trying, despite all the criticism, to avoid unnecessarily weakening Switzerland,’ he added.

Villiger said a lack of global coordination would force big banks to exploit regulatory differences, warning that many businesses would migrate to less tightly controlled markets.

‘What has emerged internationally is not so much a global playing field with solid, uniform rules, but poorly coordinated national regulation often drawn up under populist political pressure,’ he explained.

‘In this difficult environment, we, as a global bank, 80% of whose shareholders are non-Swiss, must seek the optimum structure for our business,’ he added.

UBS chief executive Oswald Gruebel has said stiff Swiss capital standards, which the government sent to parliament last week and hopes to get be approved this year, could force the bank to move units abroad.

The Swiss rules were drawn up after the government was forced to bail out UBS during the financial crisis. But the bank’s first quarter earnings figures shows that money is pouring back into its core wealth management arm, while its struggling investment bank did better than expected, although it said it might have reassess some of its activities in light of international regulations.

‘I am confident that the remarkable financial improvement that we have achieved in the last two years is sustainable,’ Gruebel told the AGM.

However, the UBS point of view is in contrast to remarks from Credit Suisse chief executive officer Brady Dougan, who said he did not expect the Swiss rules to have a big impact on his bank's competitive position and sees progress towards a more level playing field internationally.

Credit Suisse, Switzerland’s second largest banks has reported record first quarter investment banking revenue that beat forecasts. Its investment bank revenues rose to a record $5.4 billion from $5 billion a year ago.

Meanwhile, the popular right wing Swiss People's Party (SVP) has proposed that the big banks split off their US divisions, separating risky investment banking from the more stable core wealth management business in Switzerland.