When UBS presented its medium-term plans last November, investors and analysts were taken aback by the revelation that Swiss regulators, already at the forefront of calls to impose new leverage limits on the global banking industry, were insisting on extraordinarily high tier 1 equity ratios for big Swiss banks of up to 16% by 2013, with half of this to be in the form of pure equity and retained earnings. As well as all the work he has to do overhauling UBS’s risk management and reorienting its businesses to thrive much more efficiently on low capital consumption, low leverage and low proprietary risk-taking, Grübel has found himself spending a large amount of time in meetings with other senior bankers and regulators debating how to write new rules for the game.
This seems to worry him far more than the mess he inherited inside UBS.
Grübel tells Euromoney: "It is astonishing just how far apart different banks and different regulators stand on many of these issues. So for example, while some of the US banks are already arguing that a core tier 1 equity ratio of 4% is too high, the Swiss are saying that 8% is a bare minimum and not even to think of anything less than that."
