FDP senators seek to return UBS capital rules to government

Members of Switzerland’s FDP party in the Council of States want to send the question of UBS’s capital requirements back to the Federal Council instead of debating it in parliament, Swiss public broadcaster SRF reported.

The Council of States is due to consider the issue on Thursday, although it remains unclear whether the debate will take place. FDP senators decided on Tuesday evening not to take up the banking regulation package and to return the capital question to the government.

FDP senator Andrea Caroni proposed the move, saying the Federal Council was the appropriate body to draw up the new capital rules and could provide a clear and legally certain solution more quickly.

The FDP group in the Council of States backed the proposal. Members of the Centre party also appear likely to support it.

The Federal Council, including FDP Federal Councillor Karin Keller-Sutter, supports strong banking regulation and parliamentary involvement. It wants UBS to fund its foreign subsidiaries entirely with hard equity.

The Council of States Economic Affairs and Taxation Committee has proposed a compromise requiring 50 percent core capital, with the remainder covered by so-called AT1 bonds.

Green Liberal Party senator Tiana Angelina Moser supports keeping the compromise. She said the committee had worked out a viable solution and that it was important to balance security, tax revenue and jobs.

SRF parliament correspondent Andy Müller said the FDP wanted to avoid the debate over major banks during an election year. He noted that returning the issue to the Federal Council could also allow the government to impose very strict capital requirements on its own, although it remained unclear whether that would win a majority in the Council of States.

Caroni said capital requirements had always been set by the Federal Council through an ordinance and without a referendum. Returning the issue to the government would also prevent a nationwide vote.