By Mathew Carr*
Cry-baby UBS’s Complaint About Capital Rules Rings Hollow
Switzerland’s central bank has held its policy rate at zero since September 2022, making it the cheapest place among major economies to borrow in your own currency.
That fact rarely enters the debate raging in Bern this week over how much capital UBS should hold against its foreign subsidiaries — and its absence is telling, because it’s not the only structural advantage going unmentioned.
The argument on the floor of the Council of States on Thursday was framed almost entirely around competitiveness. SVP lawmaker Hannes Germann called the government’s proposal “legislative activism” that overshoots its target, arguing that after UBS absorbed Credit Suisse in 2023, “we should all be proud and grateful” rather than burdening the country’s last global bank with the world’s toughest capital rules.
UBS chairman Colm Kelleher struck a similarly resigned note the same day: “We can live with it, but it will cost us more.” Both remarks treat capital requirements as a pure cost imposed on a bank that would otherwise compete on a level field with JPMorgan or HSBC.
But UBS didn’t arrive at its current size through fair competition — it arrived there because Switzerland’s own competition watchdog was cut out of the process. When the Credit Suisse merger was forced through in March 2023, the government invoked emergency powers that suspended COMCO’s normal merger review entirely, handing the antitrust decision instead to FINMA, the banking regulator, which explicitly subordinated competition concerns to financial-stability priorities.
COMCO was left to submit a non-binding opinion after the fact; the resulting bank now holds roughly a third of domestic deposits and corporate loans. That’s not the story of a company that competed its way to dominance — it’s a company that competition law was switched off to create.
Which makes today’s complaints about “fairness” harder to take at face value on two fronts, not one.
UBS enjoys the funding advantage of near-zero Swiss rates that JPMorgan and HSBC, borrowing against materially higher central-bank rates, simply don’t have access to.
And it enjoys a domestic market position that ordinary merger scrutiny would likely never have permitted, since Swiss antitrust officials themselves flagged serious concerns once they were finally allowed to weigh in — concerns the government’s own FINMA decision brushed past.
The capital rules now under negotiation are, in a real sense, the bill for that second advantage: a recognition that a bank Swiss authorities allowed to become this large, this fast, by suspending the normal checks, now needs proportionately larger buffers precisely because normal checks didn’t apply when it was built.
Framed that way, UBS is less a company facing an unfair new burden than a company facing the first real reckoning for how it got here — cheap money and a merger nobody was allowed to properly contest.
SP co-president Cédric Wermuth, on the centre-right’s push to water down the government’s proposal, said in April: “I would say bluntly, party donations work.”
Even more striking: Finance Minister Keller-Sutter — the person leading the push for stricter capital rules — has publicly accused UBS of lobbying tactics she called “not very Swiss,” saying she’s heard directly from lawmakers who worry UBS could reduce its donations to their party if they don’t cooperate. That’s a sitting cabinet minister describing pressure that sounds close to bullying.
None of this resolves whether 100% CET1 backing is the right number, or whether the AT1 compromise adequately protects taxpayers — genuine technical questions still unresolved when the chamber adjourned until next Wednesday.
But “this isn’t fair to us” sounds different once you notice how much of UBS’s current position exists because fairness, in the antitrust sense, was deliberately set aside to create it.
*with AI including Claude