Swiss financial regulator plans to stress-test UBS this year

Credit: REUTERS/Denis Balibouse

By Noele Illien

BERN, March 20 (Reuters) - Swiss financial regulator FINMA said on Wednesday it plans to carry out 40 reviews of UBS UBSG.S and two stress tests this year on the bank after it took over rival Credit Suisse in 2023, which 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.

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.

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

((rachel.more@thomsonreuters.com;))

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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