BERN (Reuters) - The chairman of Swiss banking giant UBS UBSG.VX and the head of Switzerland’s financial watchdog clashed on Monday over the country’s need to have tougher targets for its own banks than the global standards for the industry.
Switzerland is expected to hold off on outlining tougher capital requirements, known as leverage ratio targets, for its biggest banks until new international standards are outlined later this year.
Mark Branson, head of Swiss financial regulator FINMA, told a conference in Bern that Switzerland’s standards should be among the toughest globally.
“We should be leaders internationally (on the leverage ratio),” Branson said. “The reason for that is because we have a very important financial sector compared to our national economy.”
UBS Chairman Axel Weber on the other hand urged for common global standards and downplayed the need for a “Swiss finish” for the country’s banking standards.
“I think it’s important that we have comparable regimes internationally,” Weber said. “For me that doesn’t necessarily mean that, in addition to what we already have, we need to top it off with a Swiss finish.”
Switzerland has been at the forefront of efforts by policymakers and regulators to ensure banks do not become so big and interconnected with the international financial system that they would need rescuing with taxpayer cash if they run into trouble.
Solving this “too big to fail” problem has been a priority for regulators in the United States and Europe after several banks, including Zurich-based UBS, were bailed out in the 2007-2009 financial crisis.
The Swiss National Bank is due to publish its assessment of the Swiss banking sector’s stability on June 18.
UBS’s Weber also said that negative interest rates, introduced in January by the Swiss National Bank to deter speculative flows into Switzerland’s currency, is putting pressure on banks’ income and margins.
“Negative interest rates are providing banks with considerable challenges,” Weber said.
Reporting by Joshua Franklin. Editing by Jane Merriman