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The management of the company prevailed with its proposals. It remains controversial whether the bank needs more capital.
Not only 14 million francs in compensation for CEO Sergio Ermotti, but also the bank’s capital management plans: all proposals from UBS management were waved through by shareholders at the general meeting.
Nevertheless, the question still arises: Shouldn’t the megabank build up significantly more capital in order to be crisis-proof?
“No state guarantee”?
CEO Sergio Ermotti says UBS is not “too big to fail”. The bank does not expect to be rescued by the state in the next crisis. It is a “factually incorrect claim that UBS has an implicit government guarantee”.
Ermotti admits that capital requirements will continue to increase. But UBS already has enough security buffers to absorb large losses. According to the CEO, the risks are borne by the shareholders, not by the state.
However, there are doubts among the public and politicians that the risks would be borne by UBS shareholders – the emergency sale of CS to UBS was carried out with state support.
Analysts are calling for billions in cushion
The Federal Council made it clear in a report two weeks ago: UBS should build up larger capital buffers. Based on the report, analysts estimate that the major bank will need to raise $15 to $25 billion in additional capital in the next few years.
But that’s not enough, says Finance Minister Karin Keller-Sutter. In the worst case scenario, she wants UBS to be “wound up” if it is no longer viable. Winding down a bank means reorganizing it or letting it die – in a controlled manner if possible – so that the rest of the economy does not suffer greatly.
Toolbox expanded
Experts have been discussing this processability since the last major financial crisis in 2008. Since then, experts, authorities and banks in many countries have developed a common, international set of rules. It allows banks to provide a significant part of their security buffers in special bonds, including so-called AT1 instruments.
The crux of the matter is that only in the event of an existential crisis do these special financial instruments become normal share capital with which the bank can continue to operate and cushion losses.
UBS has had such instruments for a long time. At the AGM, the big bank – to put it simply – expanded its toolbox in the event of a crisis. The corresponding motion passed with 91 percent yes votes.
More equity required
However, not all observers are convinced of this approach, although it is in line with banking regulation standards. “This bank is so big and so important for Switzerland that we are convinced that more equity, more shares, are important,” says Vincent Kaufmann from the Ethos shareholders’ association on the sidelines of the general meeting.
While CS is now gradually being integrated into UBS, the only remaining major Swiss bank will have to face the debate about its capital requirements even more intensively. Even if UBS claims that it is already well prepared for the next crisis – and that it is not “too big to fail”.
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UBS General Meeting: Debate about capital requirements continues – News
Casablanca Stock Exchange: “E-Bourse” marks an important milestone in the promotion of financial education among young people (minister)
In a speech read on his behalf by Mohamed Larbi Kerkeb, president of Ibn Tofaïl University, Mr. Miraoui indicated that this is an initiative which would strengthen those carried out by other national actors operating in the field. financial sector and which together constitute a driving force for promoting the role of the financial sector as an engine of economic growth in the Kingdom.
He also noted that the creation of a pool of skills in the financial field, for an emerging country with high potential like Morocco, has no need to be demonstrated, especially since the Kingdom aims to establish itself as a pole continental financial institution, dedicating its role as an actor in the service of the development of Africa, in accordance with the enlightened vision of HM King Mohammed VI.
According to the minister, “E-Bourse” will allow young people not only to better understand and master trading strategies in real conditions of the national stock market, but also to prepare them for a promising professional future in the trades of the finance, in general, and those of the stock market, in particular.
The said platform, he continued, should also constitute an essential lever capable of promoting more informed decision-making for the benefit of informed users, thanks to reliable analyses, based on artificial intelligence technology.
At the same time, Mr. Miraoui returned to the new educational model supported by the ESRI-2030 Pact which places the empowerment of students among its primary goals.
For her part, the Minister Delegate in charge of the Digital Transition and Administration Reform, Ghita Mezzour, indicated that “E-Bourse” is intended to be a space dedicated to financial education and simulation of activity. of the Stock Exchange for the benefit of students and the general public and constitutes a very laudable initiative offering a real opportunity for learning, analysis and understanding of trading and the main economic foundations which govern Moroccan business.
The minister also welcomed the citizen actions carried out by the Stock Exchange to promote stock market culture, in particular the implementation of trading rooms within universities, offering students practical and immersive spaces capable of equipping them to develop their skills, be in tune with technological developments and better integrate a constantly changing professional world.
This initiative is innovative by combining the strength of digital technology as a vector for the large-scale dissemination of financial and stock market culture and artificial intelligence in the service of education, in a field that is as exciting as it is enriching, which is the stock market, she argued, specifying that the objective is to make financial education a determining lever for the development of the capital market and the stock market in particular.
Ms. Mezzour also recalled the major reforms of the capital market, undertaken by the public authorities in recent years, in partnership with regulators and market players.
The positioning of the Stock Exchange and the capital market in general on the path to emergence and the consolidation of its regional dimension through Casablanca Finance City are the result of an ambitious reform process aimed at the development of a sector efficient, inclusive and resilient financial system, she noted, explaining that these reforms focused mainly on three pillars (the consolidation of financial stability, the deepening of the capital market and the strengthening of financial inclusion).
In the midst of digital transition, financial education should make digital an important vector, both in terms of the design of training offers and in terms of supporting awareness-raising actions, underlined Ms. Mezzour.
And added: “The opportunities offered to us by the digital revolution are considerable: cost reduction, simplification of procedures, transparency, economic agility, emergence of new activities, strengthening of financial inclusion and emergence of new savings and savings opportunities. More specifically, the digitalization of financial services presents great potential which must be seized to improve traditional financial services and above all to develop alternative savings and financing solutions.
For the minister, the “E-Bourse” platform, taking into account the digital transition and the development of internet penetration and connectivity, constitutes a model which opens the way to new perspectives in terms of promoting education and financial culture aimed at a young population on the lookout for digital technology and which now stands out as the most appropriate tool to reach wider audiences at a lower cost, allowing thus scaling up financial education programs.
Colin Ellis in BIMA: The keys to upgrading Greece
– 2024-04-24 19:27:47
As long as Greece continues its economic policies and commitment to fiscal consolidation, while successfully implementing the remaining reforms, there could possibly be an upgrade from Moody’s, he estimates in his interview with “Step” The Colin Ellisits Global Credit Strategist Moody’s Investor Service.
According to the credit strategist, a higher rating could be supported by faster-than-expected improvements in the country’s fiscal strength and more reduction in Non-performing loans (NPLs). The Moody’s official also warns that downward pressure on Greece’s rating could arise if the policy path seen in recent years is reversed, or if there were signs that past reforms are not delivering the boost to growth and fiscal accounts expected towards present, but also possibly in the event of an escalation of the geopolitical situation in Europe with the participation of NATO.
While Greece has made significant progress over the past decade, the debt-to-GDP ratio will remain high for many years
On investment, he acknowledges the government’s investment-friendly policies, but notes that the Greek economy continues to be less diversified, relying heavily on tourism and shipping. He estimates that strengthening economic resilience will take time, while highlighting as risks the high debt-GDP ratio, which will remain high for several years, as well as demographic developments.
What would Moody’s need to see to make the decision to upgrade Greece at the next scheduled rating in September?
“It is important to note that we do not pre-empt or pre-determine rating decisions. Each evaluation committee makes its own evaluation at the appropriate time. However, we list the following factors that could lead to an upgrade. Upward pressure could emerge under a scenario of continuation of economic policies and commitment to fiscal consolidation combined with successful implementation of remaining reforms.
Faster-than-expected improvements in fiscal strength and more NPL reduction would support a higher rating. In addition, a more rapid change in Greece’s economic structure, helping to improve economic resilience, would be credit positive. Further improvements in the banking sector, reducing profitability volatility and bringing asset quality and capitalization ratios closer to the Eurozone average, would also be credit positive.”
What do you think are the consequences of the recent decision not to upgrade Greece?
“We believe the rating is appropriately positioned and the stable outlook reflects our assessment of the balance of risks. While Greece has made significant progress over the past decade, the debt-to-GDP ratio will remain high for many years. Substantial EU funds together with private investment will support growth in the coming years and, together with ongoing reforms, will help raise potential growth and offset to some extent the negative impact of adverse demographics.”
In your opinion, what are the most important challenges and difficulties facing the Greek economy and in which areas do you think there is a need for progress, but also downside risks?
“We believe that downward pressures on Greece’s rating could arise if the policy path seen in recent years is reversed or if there were signs that past reforms are not delivering the boost to growth and fiscal accounts that is currently expected. In particular, signs of a sustained, material deterioration in the fiscal position, possibly coupled with a sharp deterioration in the health of the banking sector, could trigger negative rating action. An escalation of the geopolitical situation in Europe involving NATO could likely lead to downward pressure on the rating.”
How would you assess the interest of foreign investors to invest in Greece and how do you see them investing in “traditional” sectors, such as tourism, or are they also interested in new sectors?
“The current government has begun to address some of the structural challenges facing Greece, particularly those related to low investment. These actions include reducing Greece’s high tax rates, relaxing business regulations, improving the investment licensing framework and promoting privatization. The Greek economy continues to show relatively lower economic diversification compared to similar economies. Given the size and importance of sectors such as tourism and shipping, the economy is sensitive to external shocks and further improvements in economic resilience by expanding the export base will take time.”
I would also like to ask a question about the European economy, which has lost its momentum. What sources of concern do you see and what challenges do you think there might be, especially if we take into account the additional spending needs of European countries, such as in defence?
“While economic growth in Europe slowed in 2023, we expect growth to pick up a bit in 2024 and strengthen further in 2025. Governments worldwide continue to face competing spending priorities, while often still running deficits this year. In Europe, many governments are under pressure to spend more on defense, especially after Russia’s invasion of Ukraine. Without action on policies to raise tax revenue or cut spending elsewhere, or a combination of both, simply meeting NATO’s 2% target on a sustained basis by 2030 will strain the fiscal strength of France, Italy, Germany and Poland, for example”.
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Colin Ellis in BIMA: The keys to upgrading Greece – 2024-04-24 19:27:47