# Switzerland’s Social Democrats propose shrinking UBS – Aargauer Zeitung 1
Author:  Pal Sinha, Barnali 
Author URL: https://financedigest.com/author/pal-sinha-barnali
Published: 2023-05-30
Category: NEWS
Category URL: https://financedigest.com/category/news
Meta Title: Switzerland's Social Democrats propose shrinking UBS
Meta Description: Switzerland's Social Democratic Party aims to reduce UBS assets to a quarter of their current level, citing risks and need for stability in the Swiss
URL: https://financedigest.com/switzerlands-social-democrats-propose-shrinking-ubs-aargauer-zeitung-1html

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ZURICH (Reuters) – Switzerland’s Social Democratic Party has drawn up a proposal to shrink UBS assets after its takeover of Credit Suisse, the Aargauer Zeitung newspaper reported.

The combined bank will have a balance sheet of around 1.5 trillion Swiss francs – roughly double the size of the Swiss economy, posing enormous risks to the country especially as it enjoys an implicit state guarantee, party member and lawmaker Samira Marti told the paper.

The left-leaning Social Democratic Party, the second biggest party in the Swiss parliament, will propose an upper limit for the bank’s assets, namely that its assets should not exceed half of Switzerland’s GDP, which last year stood at 771 billion Swiss francs.

For the new UBS this would mean reducing its assets to a quarter of their current level.

“That would be a drastic reduction, but from the taxpayer’s point of view, it’s necessary,” the paper quoted Marti as saying.

An alternative would be imposing higher capital requirements if the [bank’s assets rose above 50% of Swiss](https://www.financedigest.com/swiss-bank-ubp-returns-to-chinese-markets.html "Swiss bank UBP returns to Chinese markets") GDP.

Any part of UBS’s [balance sheet above that threshold would require an equity](https://www.financedigest.com/decoding-balance-sheets-analyzing-assets-liabilities-and-equity.html "Decoding Balance Sheets: Analyzing Assets, Liabilities, and Equity") ratio of 30% or more, Marti said of her party’s proposal. At present the Swiss parliament is discussing an equity requirement of 15%.

The government-orchestrated rescue of [Credit Suisse](https://www.financedigest.com/snb-defends-raising-rates-says-not-to-blame-for-credit-suisse-failure.html "SNB defends raising rates, says not to blame for Credit Suisse failure") has seen 209 billion francs in state and central bank support deployed, and caused concern in parliament which rejected the package in a symbolic vote.

“The aim is for UBS to become smaller,” Marti told the newspaper. We have to make [improvements so that banks](https://www.financedigest.com/auriga-introduces-two-new-software-modules-for-improved-customer-and-cash-management-in-bank-branches.html "Auriga introduces two new software modules for Improved Customer and Cash Management in bank branches") are less vulnerable in a crisis.

(Reporting by John Revill; Editing by Edwina Gibbs)


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