FINMA tightens requirements UBS must revise emergency plans

The major bank UBS must review its emergency plans for restructuring and liquidation. The integration of Credit Suisse means that UBS must further develop its resolution planning, the Swiss Financial Market Supervisory Authority Finma announced on Tuesday.

Following the integration of Credit Suisse, UBS must revise its emergency plans for restructuring and liquidation. This means that the big bank must expand its options for action in the event of a risk of insolvency, the Financial Market Supervisory Authority Finma announced on Tuesday. The supervisory authority has now suspended the annual approval of the stabilization and emergency plans.

The current resolution strategy for UBS only provides for the continuation of business activities as part of a reorganization and restructuring of the business model, as Finma writes. However, based on the experience of the CS crisis, additional options for action are required. For example, it must be possible to exit the market by selling or shutting down individual businesses, as well as selling the bank. These options would have to be prepared by the bank in the coming years.

UBS could currently be wound up by means of recapitalization, Finma emphasizes in its press release. It also has sufficient so-called "bail-in" capital. However, due to the integration of CS, it currently has to standardize its group structures, processes and IT platforms. In future, UBS will have to revise the liquidity planning and refinancing of the Swiss unit in particular when the emergency plan is activated.

As a globally systemically important bank, UBS must fulfill special crisis prevention requirements. For example, it must draw up a stabilization and emergency plan, both of which are assessed annually by Finma. The stabilization plan describes how the bank intends to avert the risk of insolvency on its own. The emergency plan shows how systemically important functions can be maintained if stabilization is not successful.