“Spectacular things” were discovered in UBS’s quarterly report on Wednesday, the CH-Media newspapers.
“UBS increased the average risk premium on SME loans by 42 percent in the first half of the year.” The bank “shocks thousands of Swiss SMEs.“
The author of the article, one of the most experienced banking journalists in the country, comes to this conclusion by comparing the total loans to SMEs and the write-downs on them.
Got 259 billion for CS, now massive premium for backbone (CH Media)
UBS expects write-offs of around half a billion euros for the country’s medium-sized companies.
This compares to the more than 23 billion outstanding operating loans to small and medium-sized businesses.
“To protect itself against these expected losses, UBS charges an average risk premium of 2.2 percent for each SME loan,” says the author.
“At the end of March, this average value was still 1.8 percent and at the end of 2023 it was 1.55 percent.”
This means that on average every SME has had to pay “42 percent more for the risk accepted by the bank since the beginning of the year”.
“This is a spectacular increase, which could be due to a very significant deterioration in the economic situation or the correction of previously less stringent risk provisions.”
The statement is explosive. It fits in with previous stories, according to which UBS is massively bleeding the small and medium-sized companies that are central to the Swiss economy.
“UBS to SMEs: Three times more interest, six times faster amortization” was the title of a report in this medium three weeks ago.
It is an industrial group of companies based in the canton of Zurich, which had received an operating loan of over 5 million from CS for an acquisition.
The situation then became tense during the Covid years, but since 2023 the company has been in the black again.
It is on track for 2024. Nevertheless, UBS has massively tightened the conditions.
At the end of July, UBS said in its story: “UBS remains clearly committed to the Swiss economy and Swiss companies.”
And further: “In general, credit prices depend on various factors: changing macroeconomic environment (e.g. rising interest rates increase financing costs for banks; many loans taken out in a negative interest rate environment are not profitable in the current environment) and rising regulatory costs.”
UBS paints a bleak picture compared to the Seco figures, writes CH Media.
On Wednesday, UBS CEO Sergio Ermotti said: “We are not here to subsidize business.”
He echoed his Swiss boss Sabine Keller-Busse, who told the NZZ that CS had previously taken too much risk in its Swiss corporate banking business.
UBS’s tough approach with the risk premiums, which have now been put into figures for the first time by CH-Media, is putting a strain on the Swiss SME economy.
The bank is dependent on UBS because it is often dependent on exports. The ZKB cannot step in to fill the gap.
Citizens and taxpayers have enabled UBS to make a 30 billion CS bargain. They do not understand why the middle class now has to pay the price for this.
