SEC Clears Path for UBS Crisis Resolution Plans

A division of the Securities and Exchange Commission told UBS Group Wednesday (July 8) that it will not recommend that the regulator undertake enforcement action against an exchange of securities ordered by the Swiss Financial Market Supervisory Authority (FINMA).

The SEC’s Division of Corporation Finance said this in a letter written in response to an incoming letter written on behalf of UBS Group. The SEC’s decision removes a potential legal obstacle to UBS Group’s crisis-resolution plans, as the securities transactions that may be ordered by FINMA are meant to ensure the bank’s orderly resolution, Reuters reported Wednesday.

This potential “bail-in” of UBS Group is designed to recapitalize a failing lender by converting debt securities into equity rather than seeking taxpayer support, according to the report.

The SEC said that while this plan would constitute an “offer” and “sale” of securities under U.S. law, it could qualify for an exception from Securities Act registration requirements, per the report.

It was reported in October 2024 that FINMA would require UBS to revise its recovery and emergency plans due to the bank’s June 2023 takeover of Credit Suisse. Switzerland’s central bank announced in March 2023 that UBS would purchase its then-struggling rival Credit Suisse in a $3 billion government-supported deal. The announcement followed nine days of unease around the banking sector after Credit Suisse saw its shares shed a quarter of their value.