Silicon Valley Bank, Credit Suisse, and most recently First Republic Bank – they all had to be saved or have collapsed. There are more banks in the U.S. rumored to be in danger. Is it still correct, in your view, to say that a global financial crisis has been averted?
We are certainly experiencing significant stress in the financial system as a result of sharply increasing interest rates. Emerging in the U.S., we had a sort of a financial instability crisis slowly extending over to the rest of the world. And as such, the swift action of the Swiss authorities and UBS has certainly prevented a contagion which could have resulted in a significant disturbance of the financial system – or indeed, a global financial crisis.
After the events of last week, some people question whether large global banks are still needed at all, especially in a small country like Switzerland. What is your answer as a former CEO of UBS and current President of the Swiss Bankers Association? Why does Switzerland still need large banks?
Global financial institutions provide a great deal of services which are highly relevant for globally active corporations. Switzerland is an export nation, and we do not want our corporations to be entirely dependent on foreign financial institutions – global institutions – which also provide these kinds of services. But beyond services for international corporations, a global financial institution such as UBS also provides important services for the rest of the banking system. And last but not least, it’s also a very important institution in the eyes of the rest of the world, demonstrating the power and prowess of the Swiss financial center.
Some politicians are now asking for new regulations to prevent a future banking crisis. Do you agree?
We certainly take these concerns very seriously. It is only natural that after such an event some questions are brought up, if these things can be avoided – or what needs to be done in the future. We are, however, convinced that we need to understand in detail what happened – particularly last October when we had a first wave of substantial client deposit withdrawals – and of course during the days and weeks in March that eventually ended in this emergency takeover. Only a thorough analysis and a very precise understanding of the sequence of events will allow us to draw the right conclusions to amend the regulations, if needed at all.
After the takeover of Credit Suisse by UBS there has been a lot of uncertainty about what will happen to the Swiss financial center. Is the Swiss financial center still competitive internationally?
Of 239 financial institutions in Switzerland, one had a problem. And 238 are prospering, are super sound and are delivering the best services at an absolutely internationally competitive level to their clients. And as such, I am convinced that the very foundation of the success of the Swiss financial center is there and will continue to be there. And these institutions are continuing to prosper into the future. And last but not least, the takeover of Credit Suisse by UBS has demonstrated the strength of the Swiss financial center – by having an institution that can do that, and by having authorities and a government which acted so swiftly and effectively to come to this solution in only a few days.
Particularly with regard to the international interconnectedness which has been clearly demonstrated in the banking sector, there is an international desire for closer cooperation. What steps is the Swiss financial center willing to take in this regard?
Well, we are a global leader in cross-border wealth management. And as such, we are deeply interconnected with all the institutions that are active on an international level. And ever since, we have advocated for a level playing field in regulation, which means that the same rules for the same business apply everywhere in the world. And we continue to do so. We are also advocating for a good relationship with the European Union, open markets and free trade, which we believe is the basis for prosperity for all economies. And we will continue to do so through all the means and the channels we are active on. And last but not least, our regulatory authorities are also members of the relevant bodies for international regulations, from the Basel Committee on Banking Supervision to the Financial Stability Board. And I think that with the experience we went through now, Switzerland has a great deal of insight to offer into the development of international regulation when it comes to financial stability.
Looking into the future, where will the Swiss financial center be in five years’ time?
We are doing all that we can so that we continue to grow as a financial center here in Switzerland. We are committed to preparing for the future. We are working to become a leader in sustainable finance. We are working on digitalization. We have innovative projects all over the place that we are working on. So I am convinced that with the combination of our tradition as a trusted location with a sound legal framework, with highly educated experts, we can continue to grow successfully into the future.
Marcel Rohner, thank you very much for sharing your time with us.