Swiss financial regulator plans to stress-test UBS this year


By Noele Illien

BERN (Reuters) -Swiss financial regulator FINMA said on Wednesday it plans to carry out 40 reviews of UBS and two stress tests this year on the bank after its 2023 takeover of rival Credit Suisse heightened concerns about “too big to fail” lenders.

FINMA laid out plans for regulating the country’s last remaining global systemic bank in its 2023 annual report as the regulator doubled down on its calls for more powers. “Forty on-site supervisory reviews are planned at UBS in Switzerland and abroad, as well as two in-depth stress tests this year,” Thomas Hirschi, FINMA’s head of the banks division, said. The supervisory authority said its activities focus on the risks that come with UBS’s integration of its former rival Credit Suisse, including operational stability. FINMA said it was also focusing on the combined bank’s capital and liquidity planning and said that UBS’s recovery and emergency planning post-merger will be critically reviewed.

The regulator has come under fire for its supervision of the Credit Suisse, and has defended its role in the meltdown which eventually triggered the biggest rescue of a bank since the global financial crisis of 2008-2009.

FINMA said it believed additional tools will enable it to fulfil its supervisory and enforcement job more consistently.

In its appraisal of the sector, FINMA identified a number of serious shortcomings, notably in the areas of money laundering, mortgage lending and cyber risks. It urged the banks concerned to remedy these shortcomings without delay.

On Tuesday, the Swiss National Bank called for an overhaul of bank capital regulations, saying that Switzerland needed rules that recognise UBS has become a bank with even more systemic importance following its takeover of Credit Suisse.

The SNB said banks’ financial positions needed to be strengthened to avoid future crises. The central bank also said it was important to ready a broad range of options for the resolution of a systemically important bank.

FINMA, which also oversees insurers, fund managers and fin techs, said it carried out 732 investigations and concluded 27 proceedings against companies and individuals in 2023.

Regarding banking oversight, FINMA said it had conducted 96 on-site supervisory reviews last year, including 57 longer supervisory reviews and 39 deep dives.

(Reporting by Noele Illien, editing by Rachel More, Dave Graham and David Evans)

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