ZURICH Jan 21 UBS urged global
regulators to be clearer on how they will rein in risk-taking in
traditional banking business, as opposed to investment banking,
saying that failure to do so could jeopardise growth.
The Swiss bank's Chairman Axel Weber and Chief Executive
Sergio Ermotti highlighted the example of leverage ratios in a
guest editorial in Tuesday's Wall Street Journal as policymakers
from America, Europe and Asia gather this week for an annual
meeting in Davos.
"This leaves questions about stimulating growth,
particularly in light of calls by some for an increase in
leverage ratio requirements far above the internationally agreed
level of 3 percent," the two bankers wrote.
Last week, global banking regulators agreed to ease the way
a new rule, meant to rein in risky balance sheets from 2018, is
The leverage ratio acts as a backstop to a lender's core
risk-weighted capital requirements. A ratio of 3 percent means a
bank must hold capital equivalent to 3 percent of its total
loans regardless of risk.
In Switzerland, UBS and Credit Suisse should be
subject to a leverage ratio of 6-10 percent, instead of 3
percent, the country's finance minister said in November.
Global banking regulators are split over whether to fix the
minimum global level at 3 percent or higher.
UBS's Weber and Ermotti complained that leverage ratio rules
laid out by the global Basel III accord don't distinguish
between between quality of assets to underpin risk, which could
force banks to lower high-quality assets to bolster leverage
ratios and profitability.
"These banks would have less protection against liquidity
risks, thus increasing instability - surely not the intended
consequence," the two bankers wrote.
(Reporting By Katharina Bart; Editing by David Goodman)