ZURICH (Reuters) – Regulatory uncertainty is weighing on the valuation of UBS and other European lenders and the Swiss bank’s integration of its former rival Credit Suisse has placed an added burden on it, UBS CEO Sergio Ermotti said on Thursday.
“European banks have a 20% discount for regulatory uncertainty,” Ermotti said at an event in Zurich. “Not necessarily because it’s strict or not strict, but because it’s unpredictable,” he added.
UBS faces an additional discount over uncertainty about the bank’s ongoing integration of its fallen rival, as well as the new banking regulation Switzerland is drawing up in response to the 2023 demise of Credit Suisse, he said.
The Swiss government in early June is expected to present an initial proposal on the future capital requirements Switzerland’s remaining big bank faces under the new rules.
“If we have 50% more minimum requirements than our competitors it will be impossible to be competitive with these big players,” Ermotti said making reference to U.S. banks like Bank of America, Morgan Stanley and Goldman Sachs.
(Reporting by Ariane Luthi; Editing by Dave Graham)
