UBS, one of the two “Too Big To Fail” Swiss banks, with a balance sheet over twice the Swiss GDP, is apparently scared by the SP-SVP initiative for bank separation, so that it came out with its preemptive fake scheme, in the attempt to cheat legislators and make the reform “useless.”
In its latest quarterly report, UBS wrote that
“UBS intends to establish a new banking subsidiary of UBS AG in Switzerland. The scope of this potential future subsidiary’s business is still being determined, but we would currently expect it to include our Retail & Corporate business division and likely the Swiss-booked business within our Wealth Management business division. We expect to implement this change in a phased approach starting in mid-2015. This structural change is being discussed on an ongoing basis with FINMA, and remains subject to a number of uncertainties that may affect its feasibility, scope or timing.” The bank lobby mouthpiece, the Neue Zürcher Zeitung, wrote that “Domestically, the separation of large banks with a big hammer, demanded especially by the SVP and the SP, is not yet fully off the screen, but the organizational outsourcing of systemically relevant activities of the large banks could take the wind out of its sails.”
Both Corrado Pardini and Cristoph Blocher, the initiators of the Bank Separation Initiative, welcomed the UBS move, while insisting that the separation between investment banking and commercial banking should be a real one.
“UBS must now explain concretely what its plans are,” Pardini said. “We will watch every step by UBS very closely.” He said that the SP and the majority of the National Council would not be satisfied with a fake solution. Pointing to the separation demanded by the parliamentary motion, Pardini said: “It is still open whether this issue [separation] is at all addressed by the planned outsorcing.”
Blocher, on his side, welcomed the idea of separating UBS foreign activities from domestic activities. Wrongly, he said that a split along geographic lines is more important than separating out the investment banking activity. Additionally, however, “credit connections between the solid Swiss activities and especially investment banking in the USA should be prohibited or at least limited.”
The UBS move shows that the financial oligarchy is taking the Swiss Glass-Steagall initiative seriously and is attempting to torpedo it, by saying: “Look, we ourselves will make the separation, we don’t need any law.” Legislators should demand that UBS put all its cards on the table. Only a full separation is acceptable, no “subsidiary,” no holding-company umbrella over the several banks. And they should go ahead with Glass-Steagall anyway: if UBS is serious about its “separation” (improbable), they will find themselves already complying with the new legislation.