Switzerland's Social Democratic Party has drawn up a proposal to reduce UBS' assets after its takeover of Credit Suisse, the Aargauer Zeitung newspaper reported.
The combined bank will have a balance sheet of about 1.5 trillion Swiss francs - roughly double the size of the Swiss economy, posing enormous risks, especially as it enjoys an implicit state guarantee, party member and lawmaker Samira Marti said in a statement.
The left-wing Social Democratic Party, the second biggest party in the Swiss parliament, will propose a ceiling for the bank's assets, namely that it's assets should not exceed half of Switzerland's GDP, which fell to 771 billion Swiss francs last year.
For the new UBS, this would mean reducing its assets to a quarter of their current level.
That would be a drastic reduction, but from the taxpayer's point of view, it's necessary, the paper quotes Marti as saying.
An alternative would be imposing higher capital demands if the bank's assets rose above 50% of Swiss GDP.
Any part of UBS's balance sheet above that minimum level would require an equity ratio of 30-30% or more, Marti said of her party's proposal. At present, the Swiss parliament is discussing an equity requirement of 15%.
The government-orchestrated rescue of Credit Suisse has resulted in a significant surge in francs in state and central bank support, leading to concern in parliament, which rejected the package in a symbolic vote.
The aim is to make UBS smaller, Marti said. We have to improve to make banks less vulnerable to a crisis.