Ethos supports the Swiss government's proposal to regulate large banks by requiring them to deduct their holdings in foreign subsidiaries from the core capital of their parent companies. This is the centrepiece of the reforms following the Credit Suisse crisis. The new regulation will significantly contribute to the prevention of future banking crises and their consequences for third parties.
Ethos supports the measures proposed by the Federal Council to strengthen the resilience of large banks and the financial system. In particular, Ethos welcomes the proposed complete deduction of holdings in foreign subsidiaries from the core capital of the Swiss parent company. Ethos considers the proposal to be the centrepiece of the banking regulation reforms following the Credit Suisse crisis and supports it in its entirety, as stated in its statement published today (in French or German) on the consultation conducted by the Federal Department of Finance FDF.
Targeted and effective increase in the level of protection
Long-term shareholders have an interest in UBS remaining stable and profitable over time. The proposed measures will effectively increase the Group's immunity to any upheavals at its foreign subsidiaries. Full capital adequacy requirements for foreign holdings mitigate the risks of jeopardising the capital of both the subsidiary and the parent company due to losses at foreign subsidiaries, thereby exacerbating the crisis.
In addition to its preventive protective effect, the new regime offers advantages in crisis situations: the more solid capital base of the parent company improves the chances of strategic transactions succeeding in crisis situations to stabilise the bank independently (e.g. sales of parts of the company). The adjustment therefore offers direct protection for the stakeholders of UBS's parent company, particularly its creditors, Swiss taxpayers and shareholders.
Ethos Director Vincent Kaufmann comments: "The recent banking crises in Switzerland originated in the international activities of our major banks. By providing full capital backing for participations in foreign subsidiaries, this reform rectifies a significant initial design flaw in the Swiss Too-big-to-fail-regime. It effectively and appropriately strengthens the bank's stability. In addition to Switzerland's political and legal stability, the increased capital provides a solid foundation for UBS to successfully develop its wealth management business."
Ethos advocates for high-quality capital
These regulatory adjustments are the second step in the reforms that were initiated following the crisis and the collapse of Credit Suisse. As a first step, the Federal Council amended the Capital Adequacy and Liquidity Ordinance (consultation response from Ethos). Further legislative amendments will be published by the Federal Department of Finance FDF in the first half of 2026 as the third and final package of this reform.
Ethos has been campaigning for many years for a strengthening of high-quality capital, both at the regulatory level and in its role as a shareholder and representative of shareholders of systemically important banks. Sufficient and high-quality capital is crucial preventing future crises.
