The merger between UBS and Credit Suisse has raised concerns about the financial giant's disproportionate influence on Switzerland's economy. Former Finance Minister Ueli Maurer expressed that UBS, with its massive balance sheet, now poses substantial risks that need mitigation. The bank's assets exceed twice the annual economic output of Switzerland, making it too significant for the country’s financial stability. There are worries about potential failure and the lack of local entities capable of absorbing such a colossal entity, which could lead to severe repercussions for public finances. Measures to mitigate these risks lie primarily with shareholders through their board member selections, ensuring that taxpayers do not bear the ultimate burden.

Economic Disproportionality and Risk Concerns

The integration of Credit Suisse into UBS has resulted in a financial institution whose size is alarmingly out of proportion with the Swiss economy. According to former Finance Minister Ueli Maurer, this discrepancy creates an environment where the bank's failure could have catastrophic effects. With assets totaling approximately US$1.7 trillion, UBS's balance sheet dwarfs the nation's annual economic output, placing undue pressure on the country's financial health. The absence of comparable local competitors exacerbates this issue, as there would be no viable alternative to absorb UBS in case of a collapse. This situation highlights the critical need for strategies to reduce the associated risks.

The sheer scale of UBS relative to Switzerland's economy means that any instability within the bank could ripple through the entire national financial system. The potential consequences of such a scenario are dire, including severe damage to public finances if the government were forced to intervene. Maurer emphasized the importance of addressing this imbalance proactively. He stressed that measures must be taken to ensure the bank does not become a systemic risk, particularly given the lack of other major financial institutions in Switzerland that could take over in an emergency. The responsibility for managing these risks should fall on the shareholders, who can influence governance through their choice of board members. This approach aims to prevent taxpayers from bearing the brunt of any future financial crises.

Shareholder Responsibility in Risk Management

Maurer highlighted that the primary responsibility for mitigating the risks posed by UBS's immense size lies with its shareholders. Through their selection of board members, shareholders have a crucial role in guiding the bank's direction and ensuring prudent management practices. The goal is to prevent the burden of potential failures from falling on taxpayers. By actively participating in corporate governance, shareholders can help steer UBS towards more sustainable practices and reduce the likelihood of systemic risks. Maurer's comments underscore the importance of proactive risk management to safeguard both the bank and the broader economy.

Maurer, who stepped down from his position months before Credit Suisse's collapse in March 2023, emphasized that the shareholders' involvement is essential. Their decisions regarding board appointments directly impact the bank's operational policies and risk management strategies. In a well-functioning corporate structure, shareholders act as stewards of the company's long-term health, ensuring that it operates responsibly and sustainably. By holding board members accountable, shareholders can promote transparency and sound decision-making, ultimately reducing the risks associated with UBS's oversized presence in the Swiss economy. This approach not only protects the interests of shareholders but also contributes to the overall stability of the financial system.