UBS Told to Bolster Emergency Plans

The regulator informed the bank that it needs to ensure it can be wound down or sold without risking financial stability or taxpayer funds.

As UBS integrates Credit Suisse, FINMA said it has suspended the annual approval of UBS’s recovery and emergency plans.

The regulator believes that additional measures are necessary to strengthen crisis preparedness and resolution planning for systemically important banks.

UBS acknowledged the need for improvements and said it is working on further developing its existing emergency plans. However, the bank highlighted that it currently meets the requirements to be resolvable in accordance with the preferred restructuring strategy in case of a crisis.

“Based on the experience of the Credit Suisse crisis, additional options for action are required to further strengthen crisis preparations and resolution planning for systemically important banks,” FINMA stated.

FINMA has specifically instructed UBS to revise its liquidity planning and refinancing strategies for its Swiss entity.

“In its emergency plan, UBS must in particular revise the liquidity planning and the refinancing of the Swiss entity when the emergency plan is activated,” the regulator stated.

FINMA noted that the Credit Suisse crisis highlighted problems related to the speed and extent of deposit withdrawals, emphasising the need for stronger measures to generate liquidity.

The takeover of Credit Suisse by UBS in March 2023 was a significant event that prompted a review of Switzerland’s financial system. FINMA has repeatedly called for greater powers to oversee banks, aiming to prevent similar crises in the future.