ZURICH (Reuters)

Switzerland's financial regulator, FINMA, announced on Wednesday the ongoing review of its oversight of UBS as the government plans a comprehensive overhaul of regulations to strengthen the banking sector's resilience.

Strategic Goals for 2025 to 2028

FINMA outlined its strategic goals, emphasizing enhanced supervision of financial institutions. It aims to encourage better governance and a robust risk culture with higher requirements and well-defined risk tolerance.

> "The supervisory approach for UBS will be reviewed regularly and adjusted as necessary to manage the risks associated with its systemic importance," FINMA stated.

The regulator has actively utilized supervisory tools like on-site inspections and stress tests, acknowledging increased exposure in light of UBS's expansion.

> A spokesperson emphasized, "Swift and early intervention by the supervisory authority is crucial. The proposed new tools would bolster our oversight of UBS."

In April, the Swiss government introduced a series of proposals aimed at tightening banking regulations following the 2023 collapse of Credit Suisse and its subsequent acquisition by UBS. Among the proposals were additional powers for FINMA, though the extent of the regulations remains uncertain, with discussions extending well into the next year.

The government plans to announce the supervisory improvements for FINMA by the first half of 2025 as part of the follow-up to these proposals.

FINMA stressed the importance of ensuring UBS and other systemically important banks, including Raiffeisen Group, PostFinance, and Zuercher Kantonalbank, can manage a potential restructuring or winding down without endangering the financial stability of Switzerland and beyond.

In August, FINMA required UBS to enhance its emergency and recovery strategies to guarantee a seamless transition in case of financial distress following its acquisition of Credit Suisse.

FINMA has called for stronger oversight capabilities, including powers to publicly identify banks failing to comply and to impose fines.

The government will consider a parliamentary report assessing the handling of the Credit Suisse crisis when shaping new banking regulations, which is expected to release findings in the coming weeks.