Banks: UBS must revise its resolution plans

After the integration of Credit Suisse, UBS must revise its emergency plans for restructuring and liquidation. 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 regulator has now suspended the annual approval of stabilization and emergency plans. The current resolution strategy for UBS currently 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 experiences from the CS crisis, additional options for action are required. 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.

Today, UBS could be wound up through a recapitalization, emphasizes Finma in its press release. It also has enough so-called “bail-in” capital.

However, due to the CS integration, it currently has to standardize the group structures, processes and IT platforms. In the future, UBS will have to revise its liquidity planning and refinancing of the Swiss entity in particular when the emergency plan is activated.

As a globally systemically important bank, UBS must meet special crisis prevention requirements. It must develop a stabilization and emergency plan, both of which are assessed annually by Finma.

The stabilization plan describes how the bank wants to avert the risk of insolvency using its own resources. The emergency plan shows how the system-relevant functions can be maintained if stabilization does not succeed.

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