(VOR News) – The Financial Markets Authority (FINMA) published a statement on Tuesday declaring that UBS needs to improve its crisis preparation in order to guarantee that its activities might be terminated without causing wider financial market volatility.
This statement was provided in response to a request made by UBS. UBS has said that it has put its resilience plan on hold, according to a statement released by the Swiss regulator.
This data was supplied in accordance with the declaration. This strategy is a plan that is submitted to the appropriate authorities for approval once a year.
In light of the fact that UBS is aiming to purchase its competitor Credit Suisse in the year 2023, it has come to light that the emergency protocol of the company needs to be modified.
This is due to UBS’s planned acquisition of Credit Suisse.
The Financial Markets Association stated, “In light of the Credit Suisse crisis, further measures are necessary to enhance crisis preparedness and resolution strategies for systemically important banks.” This is the declaration.
According to the official statement released by the firm, “UBS’s resolution planning needs to be further developed in order to increase the options for action that are available in the event that there is a risk of insolvency.”
“It must be possible to exit the market by selling or winding down individual business segments as well as selling the bank without jeopardising the stability of the financial system and without using taxpayers’ money.”
More specifically, the Financial Markets Authority (FINMA) has underlined that there ought to be a greater emphasis placed on measures that promote liquidity. This suggestion is intended to be more precise. The significance of this cannot be overstated because it ensures that financial institutions have adequate cash reserves in the event that there is a surge in the demand for money withdrawals.
In addition, in order to ensure that UBS is fully integrated with Credit Suisse, it was necessary for the company to combine its organizational structures, operational procedures, and information technology platforms. To achieve the aforementioned objective, this action was taken with the intention of achieving it.
FINMA has issued a statement stating that its requirements are in conformity with the recommendations that were included in the TBTF (too large to fail) research that was published earlier this year by the Swiss Federal Council. The study was titled “too large to fail.”
The UBS study was, all things considered, “too big to fail.”
Following the occurrence of the financial crisis that took place in 2008, the installation of TBTF limitations was carried out with the objective of strengthening the stability of banks and minimizing the damage that was caused by failures.
This was done in order to achieve the aforementioned goals simultaneously. Throughout the course of this procedure, this compilation of rules is being examined on a regular basis.
The decision to acquire its competitor, Credit Suisse, was made by UBS as a result of the fact that it had lost the faith of both its customers and its investors, which in turn prompted the markets to get unhappy and led to widespread withdrawals.
As a result of the fact that UBS has emerged as the country’s last large global bank, the authorities are ready to make use of the mistakes that have been made in the past in order to gather information.
It is essential to bring attention to the fact that the Financial Industry Regulatory Authority (FINMA) has been advocating for expanded jurisdiction to oversee lenders.
UBS has announced that it has already begun the process of establishing its emergency measures “in a targeted manner” in reaction to the news that was released on Tuesday. This information was disclosed in response to the news on Tuesday.
SOURCE: EN
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