Sergio Ermotti, chief executive at UBS, has said stringent capital requirements proposed by Swiss regulators will impact the bank’s competitiveness.

In an interview with the German-language newspaper Neue Zuercher Zeitung, Ermotti said that capital rules imposed by the Swiss parliament would cost it $3 billion annually and that this would impact its three million private clients.

“It's a mistake to believe the additional costs will only be borne by shareholders,” Ermotti said. “Customers and employees will also be affected.”

Ermotti was reappointed chief executive at UBS in 2023, having previously held the role between 2011 and 2020, to oversee the bank’s acquisition of Credit Suisse. Credit Suisse has said he will remain in position until at least early 2027 and in March, Neue Zuercher Zeitung reported that the board wants him to remain in post longer.

In the wake of Credit Suisse’s collapse, the Swiss government proposed UBS hold up to $24 billion in additional cent Common Equity Tier 1 (CET1) capital to shore up against the needs for any state bailouts in the future.

In the interview, Ermotti questioned criticism over UBS’s size, noting that it is around the 20th largest bank in the world, and said that requiring it to hold additional capital will add an unnecessary burden to its operations.

“Switzerland cannot aspire to be among the best in every area and simultaneously eliminate all risks,” he said, adding that UBS’s competitors are “delighted” by the proposed requirements.

Reuters reported that the new UBS requirements could be watered down in July, and at the end of August the Swiss parliament’s economic affairs and taxation committee proposed changes that would allow UBS to cover half of its capitalisation with Additional Tier 1 (AT1) capital.

This cheaper form of debt would allow UBS to hold only an additional $13 billion capital.

These changes are not universally supported, however. The Swiss finance minister Karin Keller-Sutter has criticised plans to water down the requirements, blaming strong lobbying for the shift, and has argued it will reduce the legal certainty of UBS’s operations.

“It does not improve the situation, quite the opposite,” Keller-Sutter said, per Reuters.

In his interview, Ermotti said he understood the concerns associated with AT1 but argued that his position on the matter is shared by some of the largest investors and rating agencies around the world.

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