UBS Will Get Stress Tests Twice This Year, Says Swiss Regulator

(CTN News) – The Swiss financial regulator said on Wednesday it plans to conduct 40 reviews of UBS and two stress tests on the bank this year following its 2023 acquisition of rival Credit Suisse, which has raised concerns about banks that are “too big to fail.”

As the country’s last remaining global systemic bank, FINMA laid out its plans for regulating it in its 2023 annual report, doubling down on its calls for more power for the regulator.

There will be 40 supervisory reviews performed on-site at UBS in Switzerland and abroad this year, along with two in-depth stress tests, according to Thomas Hirschi, FINMA’s head of the banks division.

In Hirschi’s view, the reviews will be carried out mainly in Switzerland, and a stress test will be carried out in each quarter of the year after the majority of the reviews are completed.

Until now, the FINMA has not published the results of such tests, nor has it disclosed how many such tests it has conducted. Other countries have a requirement that banks conduct this test at least once every year if they want to remain compliant.

In the past, FINMA has carried out tests on banks to determine whether they are able to withstand economic conditions that are extreme.

The measures included analysis of loss UBS potential, the review of a bank’s mortgage loan portfolio, and an assessment of the risk associated with the interest rate environment.

During the past year, the supervisory authority has taken steps to ensure that its activities are focused on the operational stability of the new company, which is the result of UBS’ integration with its former rival Credit Suisse.

At a press conference, FINMA president Marlene Amstad told reporters the regulator expected UBS, as well as other systemically relevant banks, to be subject to a significant increase in liquidity requirements in the near future.

Despite declining to provide any figures, she stated that the massive outflows Credit Suisse experienced in a short amount of time in October 2022 played a role in these changes.

“This experience is incorporated into the new requirements, and you can assume a significant increase in liquidity here and already now as a result of these new requirements,” she noted.

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