Big picture: Ermotti in a television interview in Zurich, Switzerland. Kelleher says that chief executive officer Ermotti was brought in to manage the integration with Credit Suisse, a process that will require at least five years. — Bloomberg
ZURICH: UBS Group AG chairman Colm Kelleher says that higher capital requirements for the Swiss banking behemoth would penalise shareholders and clients, and called instead for stronger powers for the country’s banking watchdog.
In an interview with Neue Zuercher Zeitung am Sonntag to mark one year since UBS’s government-orchestrated acquisition of Credit Suisse, Kelleher reiterated his conviction that financial supervisor, the Swiss Financial Market Supervisory Authority (Finma), needs “new instruments,” such as the power to fine and dismiss senior managers when they’re found to lack competence or suitability.
This would also gear bankers’ remuneration towards the long term, he said.
The Swiss government is due to present a report in the coming weeks on how the country’s financial rules can be improved in the aftermath of the collapse of Credit Suisse. Finance Minister Karin Keller-Sutter told Bloomberg News in January that she supports giving Finma the power to fine banks.For Kelleher, imposing higher capital requirements on UBS would mean drawing the wrong lesson from the crisis.
“If you have too much capital, you penalise the shareholders, but also the clients, because banking services become more expensive,” he said.
“We already have capital buffers that are well above the regulatory minimum.”
Rather, to ensure stability going forward, the Swiss government must clarify the relationship that Finma will have with the central bank, he said.
“I like the American model, the responsibilities are more clearly defined,” Kelleher said. “Financial stability is a task for the central bank. Banking regulation is also part of a stable financial system.”
In the interview, Kelleher said that chief executive officer (CEO) Sergio Ermotti was brought in to manage the integration with UBS’s former competitor, a process that will require “at least five years”.
“It is his task to build up credible successors during this time,” Kelleher said.
“Sergio has increased the executive board from 12 to 16 members, so we have more candidates and diversity. Now we have time to develop potential successors.”
Kelleher himself wants to remain as chairman to oversee the CEO change.
As for the integration of Credit Suisse, the difficult part will start this year, with the elimination of duplication, the merger of legal entities and the migration of information technology systems, he said. — Bloomberg
