UBS on the brink of Switzerland’s ‘too big to fail’ reckoning

rescued its stricken rival Credit Suisse a year ago, it has been waiting to hear how authorities will protect Switzerland from the risk of the country’s only remaining big bank also imploding. It is about to find out.

“Switzerland simply cannot allow UBS to fail,” said Stefan Legge, an economist at the University of St. Gallen. “If it did it would have an absolutely devastating effect on the Swiss economy.” The Swiss lower house of parliament in May 2023 backed a motion calling for systemically relevant banks to have a leverage ratio of 15 per cent of assets, far more than in the European Union, the United States and Britain.

“This can’t be done within a reasonable period by withholding profits, and raising such sums via capital markets is hardly realistic,” Ita said.Few analysts expect such onerous terms to be imposed, but it helps explain why UBS has been keen to make itself heard.

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