Switzerland is preparing to water down part of its new banking regulation package, which could otherwise require UBS to raise up to $24 billion in additional capital, according to sources familiar with the discussions.
🔍 What’s Changing
The government is considering easing rules related to:
- Deferred tax assets (DTAs)
- Software valuation
These two items alone represent about $11 billion of the total capital UBS would have been required to add.
Analysts estimate:
- If DTA deductions are removed and 50% of software deductions restored, UBS’s extra capital need could fall by $7 billion.
🔍 What’s Not Changing
Bern still intends to propose that UBS must fully capitalize its foreign subsidiaries at home — the single largest contributor to the $24B potential requirement.
🏛️ Political Pressure Building
- Two major parliamentary committees urged the government not to exceed international standards.
- Lawmakers from multiple parties expect a compromise.
- UBS has privately warned of contingency plans, including possibly relocating its headquarters if rules remain too strict.
📅 Timeline
- Final ordinance + legislative package to be published early Q2 2026.
- Ordinance rules take effect January 2027.
- Remaining regulations begin 2028 or later.
📈 Market Reaction
UBS shares rose 4.1%, outperforming the broader financials sector, following Reuters’ report.
Why It Matters
Switzerland faces a delicate balance:
- Maintaining a globally competitive banking center
vs. - Strengthening financial system resilience after Credit Suisse’s collapse.
Diluting the capital rules could preserve UBS’s competitiveness while avoiding regulatory overreach.