One of Switzerland’s main political parties could soon propose capping UBS’s investment banking activities as part of a regulatory overhaul aimed at making the sector less risky, a senior lawmaker said on Wednesday.
The right-wing Swiss People’s Party (SVP), the biggest group in parliament, would pitch the plan as soon as possible if the government proposed that UBS fully capitalize its foreign units, SVP lawmaker Thomas Matter said.
Limiting the investment bank could be a way of reducing the amount of extra capital UBS would need to hold, he said.
“I will propose that investment banking may account for a maximum of 30% of the total business of a systemically important bank and that the business areas are taken into account in the risk weighting,” Matter told Reuters.
Reuters reported this week that UBS has floated the idea of capping the size of its investment bank as one concession it is considering to try to reduce the amount of capital it might have to stump up under government proposals now expected in early June.
Responding to that report, a UBS spokesperson said on Tuesday it supported in principle the government’s efforts to strengthen financial stability provided they did not put disproportionate burdens on the institution.
Source: Zawya
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