BERN. The last piece of the too big to fail reform moved forward this week, and it moved in UBS’s direction and against it at the same time. The Senate’s economic affairs committee approved the public liquidity backstop, the state credit line for a bank in a severe crisis, by 9 votes to nil with 3 abstentions. It then voted that the fee for that insurance should fall only on systemically important banks with substantial foreign business, a description that fits exactly one institution in the country.
The backstop itself is broadly accepted, including by the banks. The Federal Council sent the bill to parliament in 2022, and the instrument was then introduced by emergency decree in 2023, in the heat of the Credit Suisse collapse. Both chambers suspended it to judge it together with the wider capital reform, and the committee resumed work only after its September decision on how much equity UBS must hold against its foreign units.
The fee is where the consensus ends. The majority argued that foreign business is substantially riskier than domestic business, and that the insurance premium should follow the risk. The calculation basis would also be widened to include bail-in debt, collateral prepared at foreign central banks and other long-term funding. A minority on the committee rejected any fee at all, pointing out that a bank has no legal claim on the state money even if the backstop exists.
A special tax, says the industry
The Swiss Bankers Association supports the backstop and condemns the fee design as a new special tax on UBS. A bank that ever drew on the line would already pay substantial premiums and interest to the confederation and the National Bank, the association wrote, and an additional levy is neither justified nor defensible. UBS itself declined to comment.
The silence from Paradeplatz is strategic. The bank has already accepted defeat on the capital question and is weighing whether to shrink its foreign business or, in the extreme case, leave Switzerland. A fee that applies only to banks with substantial foreign business gives the shrink option a new annual price tag, and the leave option a new argument.
Winter session arithmetic
The full Senate takes up the bill in the winter session, where the committee’s fee formula faces an uncertain majority. Whatever passes there must still survive the House, where the capital debate has already shown that punishing UBS and fearing its departure are both live positions, sometimes within the same party.
Behind the technicalities sits the question the Credit Suisse rescue never answered: what is the state’s guarantee for a global bank worth, and who pays for it in the years when nothing goes wrong. The committee’s answer is a number, drafted so that today it sends the invoice to one address in Zurich.