Swiss National Bank's Martin backs tougher capital rules for UBS

UBS issued a 2 billion yuan (297 million USD) panda bond with a 1.78% coupon rate, the lowest for a foreign financial institution. The bank sees China's bond market as increasingly important for international funding. UBS is expanding its presence in China, increasing stakes in UBS Securities and UBS Futures. The bank aims to strengthen its investment banking, wealth, and asset management businesses in China, citing opportunities in AI and tech IPOs.

The Swiss National Bank (SNB) vice-president Antoine Martin reiterated that UBS should fully back its foreign units with high-quality equity capital (CET1) in Switzerland. The SNB opposes a Senate committee proposal allowing UBS to use less high-quality AT1 bonds for half of the requirement. UBS argues the plan would make it uncompetitive. The SNB believes higher capital requirements do not necessarily reduce profitability.

HSBC reported a 23% rise in first-half profit to $19.5B, beating estimates, and resumed buybacks. UBS posted a 17% profit increase to $2.8B but faces a $125M U.S. fine. HSBC raised net interest income guidance and added 640K clients. UBS announced a $3B buyback but faces regulatory and capital rule uncertainties.

Switzerland launched a public consultation on banking reforms requiring systemically important lenders, including UBS, to defer and claw back executive bonuses after misconduct. The plan would expand FINMA powers to fine banks up to 10% of annual operating income and assign clearer executive accountability. If enacted, it could start as early as 2029, alongside unresolved UBS capital rules.

Switzerland launched a public consultation on stricter bank bonus rules, aimed at improving financial stability after Credit Suisse’s 2023 collapse. Draft proposals would require long-term, risk-reducing bonus structures for systemically important lenders such as UBS, including longer deferrals, possible reductions or clawbacks for losses or misconduct, and earlier FINMA intervention. Consultation runs until Nov 19, 2026.

A Swiss parliamentary committee failed to agree on proposed new capital rules for UBS. The draft would require UBS to hold about US$20 billion more CET1 capital and fully capitalise foreign subsidiaries using CET1 only, after Credit Suisse’s 2023 collapse. UBS says this is excessive. The committee will reconvene Aug 31 for a September vote.