UBS chairman warns Switzerland losing its edge to Hong Kong and Singapore
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UBS chairman Colm Kelleher's comments come as Hong Kong and Singapore become even more important hubs for international wealth managers seeking to boost revenue.
PHOTO: BLOOMBERG
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HONG KONG - UBS Group’s chairman blasted his home market of Switzerland as losing its lustre as a wealth management hub to Hong Kong and Singapore, while also warning against looming risks in the US insurance industry.
“Switzerland is facing a crossroads here, because it’s facing some major challenges,” Mr Colm Kelleher told his fellow financiers at Hong Kong Monetary Authority’s Global Financial Leaders’ Investment Summit on Nov 4.
“For the first time, it’s facing a major threat in global wealth management from centres like Hong Kong and Singapore,” he said.
Switzerland is “having a bit of an identity crisis about what its role is in world banking”, he said.
His comments come as Hong Kong and Singapore become even more important hubs for international wealth managers seeking to boost revenue. Hong Kong’s private wealth under management could nearly double to US$2.6 trillion (S$3.4 trillion) by 2031, according to Bloomberg Intelligence. Hong Kong could also overtake Switzerland as the world’s largest cross-border centre in 2025, the report said.
UBS, based in Zurich, has been examining moving its headquarters from the country since the government proposed new capital rules. The measures proposed in June want UBS – as Switzerland’s sole remaining global bank, with a balance sheet about double the size of the economy – to capitalise its foreign subsidiaries by 100 per cent rather than 60 per cent currently, to cover potential losses abroad.
UBS is working through the integration of its former rival Credit Suisse, which it agreed to acquire in a rescue operation in early 2023. The lender’s leadership is also trying to convince the Swiss government to water down planned changes to bank regulation that could impose as much as US$26 billion in fresh capital requirements on the bank.
Mr Kelleher also said Switzerland’s pharmaceutical industry is also being hollowed out as a result of US tariff talks.
He also warned of systemic risks in the US insurance sector because of ineffective regulation.
“We’re beginning to see huge rating agency arbitrage in the insurance business,” he said. “In 2007, subprime was all about rating agency arbitrage. What you see now is a massive growth in small rating agencies ticking the box for compliance of investment,” he said.
Mr Kelleher said private credit risks were never systemic but rather fiduciary, but “if we look at the insurance business, to me, there is a looming systemic risk coming through, and it’s because of lack of effective regulation”. BLOOMBERG, REUTERS
