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Switzerland could lose wealth crown to Hong Kong, warns UBS chief
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UBS Chief Executive Sergio Ermotti warned that Switzerland risks being overtaken as a global wealth management center if lawmakers overreact to the fall of Credit Suisse.
Ermotti, who was recalled as head of Switzerland’s biggest lender just days after it rescued its former rival last year, said the country needs its banks to compete globally.
“Hong Kong, Singapore and the US are aggressively competing and making great strides for the offshore wealth management crown that Switzerland holds today,” he said during a speech at the University of Lucerne on Tuesday evening.
“We cannot be complacent and pretend that just having local banks compete fiercely domestically will be enough.”
Ermotti and UBS got involved in a increasingly turbulent debate with Swiss authorities following the collapse of Credit Suisse over the future direction of financial reform in the country.
The main point of contention between the two sides is whether banks with international subsidiaries should be required to hold additional capital, a measure proposed this year by the Swiss Treasury Department, in a move that would mainly affect UBS.
Analysts predicted the rule change could lead to between $15 billion and $25 billion in additional capital requirements for UBS, with Finance Minister Karin Keller-Sutter indicating that the estimates were “plausible”.
Ermotti and UBS president Colm Kelleher had already spoken against the need for additional capital. They also rejected criticism that the combination of UBS and Credit Suisse is too big for the Swiss economy.
“There are many misinformed, populist and fear-mongering voices in the media, politics and academia, including here at this university, focused exclusively on the danger of having a big bank based in our country,” Ermotti said in Lucerne.
During his speech, Ermotti displayed a slide that showed that Hong Kong’s wealth management sector was expanding at a compound annual growth rate of 7.6% and was expected to overtake Switzerland by 2027, while Singapore’s was growing at 9%. % and was on track to be in third place.
“Foreign financial centers would benefit if Switzerland restricted its ability to maintain a leading presence abroad,” said Ermotti.
“To maintain Switzerland’s leadership, the country’s financial and industrial ecosystem must include a globally relevant player. Today that is UBS.”
During his speech, Ermotti cited the life of Credit Suisse founder Alfred Escher as an example of a businessman who took calculated risks, the first time he sought to claim the 19th century industrialist for UBS.