* Government set to approve British former banker to head
* Branson's past at UBS has stirred debate among lawmakers
* Branson given all-clear by FINMA in 2012 over Libor
* Forex rigging, U.S. tax probe among issues for Swiss
* FINMA, central bank to review too-big-to-fail laws next
By Katharina Bart
ZURICH, March 25 The Swiss government is set to
appoint British-born former banker Mark Branson as the first
non-Swiss national to head its financial regulator, two sources
said, just as the body probes currency markets and prepares for
a major review of big banks.
The appointment was scheduled for debate in the Swiss
government's weekly meeting on Wednesday, the sources, who are
familiar with the matter, told Reuters.
A Swiss Financial Market Supervisory Authority (FINMA)
spokesman was not immediately available for comment on Tuesday.
FINMA has already proposed Branson, who has worked at the
regulator since 2010 and became deputy chief executive last
year. Government approval is normally a formality in such
There has been debate among Swiss lawmakers about the
appointment, however, focusing on his stewardship of a division
of Swiss bank UBS that was involved in criminal
efforts to rig interest rates.
Branson was in charge of the UBS Japan unit between 2006 and
early 2008 when it was secretly rigging the London Interbank
Offered Rate (Libor), a leading benchmark used to price
trillions of dollars of financial products.
FINMA gave Branson, who was recused by the regulator from
all UBS Libor matters in mid-2012, the all-clear over the fraud,
which was described by U.S. authorities as being on an "epic"
Libor traders at UBS answered to investment banking
leadership in London, according to FINMA, and not to Branson,
who was never accused of any wrongdoing. Branson himself has not
In December 2012, UBS agreed to pay roughly $1.5 billion to
settle with U.S., U.K. and Swiss regulators over the Libor
scandal. UBS's Japan unit pleaded guilty to criminal fraud.
FINMA criticised management at UBS for failing to adequately
supervise its staff.
Former and current colleagues dismiss the view that
Branson's past will impede his future as head of FINMA.
"Mark Branson has a proven integrity, and a professional
objectivity, in the sense of distance. He can be very close to
someone but it doesn't compromise his objectivity, and he does
it elegantly," Luqman Arnold, a former CEO of UBS.
But criticism may resurface when Branson has to deal with
future misconduct cases.
"There cannot be anything which questions the credibility of
FINMA in any way. Branson's UBS past is a problem," Christophe
Darbellay, president of Switzerland's Christian Democratic
People's Party, said before Tuesday's news.
FINMA, along with regulators in the United States, Britain
and Asia, is currently probing possible manipulation of the $5.3
trillion-a-day foreign exchange market and Britain's financial
watchdog has said the allegations concerning currency are as
serious as those concerning Libor.
Branson joined FINMA in 2010 to oversee Switzerland's
banking sector and was named deputy chief executive last year.
He has been acting CEO since January when Patrick Raaflaub
announced his surprise departure.
Branson's promotion to the top job marks a continuation of
Switzerland's tougher, hands-on approach to banking regulation
forged in the aftermath of the 2008-09 financial crisis.
At the time, taxpayers had to prop up UBS, once the pride
of the country, with a 6 billion Swiss franc bailout after the
bank's disastrous bets on the U.S. mortgage market.
Chastened by that experience - FINMA had initially dismissed
UBS's mortgage losses as a mere "fender bender " - Swiss
authorities have since imposed some of the toughest capital
requirements in the world on UBS and Credit Suisse.
Branson, a maths and management graduate from Cambridge
University, defused any suggestion of favouritism towards UBS
last year when he blindsided his old employer with an order to
stockpile 28 billion Swiss francs ($32 billion)in extra capital.
That sum was later lowered to 22.5 billion but still hit the
bank's returns targets.
FINMA and the Swiss National Bank (SNB) begin conducting a
review of laws on banks regarded as being "too big to fail" next
This is being closely watched by investors because of
political calls in Switzerland for a tougher line on
institutions that think their scale allows them to expect state
An extensive U.S. probe into Swiss banks' role in helping
wealthy U.S. citizens evade tax has also fundamentally altered
the relationship between the regulator and the banks.
Bankers in Zurich, Geneva and Basel have complained that the
regulator had "gone rogue" on them after it urged Swiss banks
late last year to come clean about their role in offshore tax
evasion and to take provisions for resultant penalties, or risk
more costly prosecution by U.S. authorities.
Branson, 45, is versed in dealing with crises. In 2001, as
head of communications for UBS, he orchestrated its defence of
its role in the bankruptcy of national carrier Swissair, which
sparked widespread political and popular outrage.
In 2008, he became the public face of UBS in the United
States, apologising to angry lawmakers in a dramatic hearing on
Capitol Hill for the Swiss bank's role in helping Americans
People who have worked with Branson, who is fluent in French
and German, say he is principled and a stickler for details.
While at UBS, he insisted on proofing statements meant for
investors word-for-word, marking each line with a tick.
While the appointment of Branson marks a continuation of his
predecessor's tougher line on regulation, insiders say he has a
"lighter touch" than Raaflaub, who once infuriated bankers by
saying it wasn't FINMA's job to promote the competitiveness of
($1 = 0.8862 Swiss Francs)
(Additional reporting by Oliver Hirt; Editing by Carmel
Crimmins and Anthony Barker)