In a recent newsletter, Roula Khalaf, the Editor of the Financial Times, highlights significant developments in banking regulations, focusing on comments made by Colm Kelleher, the Chair of UBS. During the banks annual general meeting, Kelleher voiced strong opposition to proposed reforms concerning capital rules in Switzerland, labeling them as 'extreme' and warning that their implementation would necessitate an increase of 50 percent in the bank's capital requirements.

Kelleher expressed his concerns on Thursday regarding the measures being considered by Swiss governmental authorities and financial regulators. He elaborated that these increased capital demands could severely undermine UBSs competitive edge in the international banking arena. 'Finma and the Swiss National Bank are suggesting additional capital requirements, which would lead to an approximate 50 percent increase from current levels,' Kelleher remarked. This statement marks a significant point of contention as UBS finds itself at the center of a growing conflict with Swiss political and regulatory bodies over the impending reforms.

As the Swiss government prepares to present a draft legislation on these new regulations by June, tensions have escalated. UBS is being urged to bolster its financial backing for foreign subsidiaries, a move that could inflate its capital requirements by as much as $25 billion. This push comes in the wake of the collapse of Credit Suisse, aiming to enhance the stability of Switzerland's financial sector and mitigate the risks of another potential crisis involving the expanded entity of UBS.

In 2023, UBS executed a state-sponsored acquisition of its competitor Credit Suisse, making it the sole bank in Switzerland listed among global systemically important financial institutions. Since rumors of the capital reforms surfaced last year, UBS has been actively lobbying against them, alleging that such changes would jeopardize its international competitiveness.

Notably, while UBS faces increasing capital demands domestically, other nations, particularly the United States, are contemplating retracting regulatory measures that were set in motion following the financial crisis. In parallel, the United Kingdom recently announced a delay in new capital rules for its banks by an entire year.

Kelleher emphasized the potential ramifications of overregulation, stating, 'Let me be crystal clear on this point: overregulation in Switzerland poses a significant risk to the long-term success of UBS.' He added, 'It is our fundamental fiduciary duty to mitigate this risk on behalf of our shareholders.'

He further highlighted the concept of the 'Swiss finish' in regulatory measures, asserting that while UBS already contends with stringent regulatory expectations, adding another layer of complexity would further impair both the bank and the broader Swiss economy.

In light of the regulatory uncertainties, Kelleher assured stakeholders that UBS remains committed to a $3 billion stock buyback plan for the current year. The bank previously announced intentions to repurchase $1 billion in shares during the first half of 2025 and an additional $2 billion in the latter half. However, he cautioned that any significant reforms to the capital framework could jeopardize these plans. 'In the absence of any significant, immediate changes to the current capital regime, we remain committed to returning capital to our shareholders,' Kelleher concluded on Thursday.