Switzerland and UBS are reportedly signalling a willingness to find common ground on new bank capital requirements, potentially paving the way for parliament to approve rules acceptable to both the government and the bank.
UBS has strongly criticised the government’s proposed regulations—introduced in June after the 2023 Credit Suisse collapse—which would have required an additional $24 billion in capital. The bank argued that such a requirement could put it at a disadvantage compared with global peers, prompting consideration of mitigation strategies, including relocating its headquarters.
Sources indicate that a compromise could lower the additional capital burden to around $15 billion—an amount UBS could tolerate. Key points under discussion include capitalisation requirements for UBS’s foreign subsidiaries, currently set at 60% and potentially increasing to 100%, with parliament possibly settling on an 80% threshold. Another potential solution is allowing part of the capital requirement to be met with Additional Tier 1 (AT1) debt instead of Common Equity Tier 1 (CET1) capital. UBS held approximately $19 billion in AT1 debt at the end of June.
The process is ongoing, with parliamentary deliberations expected in early November. UBS is under pressure to find an acceptable compromise, as activist investors and shareholders emphasize competitiveness concerns. While UBS shares have rallied recently, they continue to lag peers this year.
Roman Studer, CEO of the Swiss Bankers Association, commented: “I am convinced that in the end we’ll get a result that ensures a better balance between stability and competitiveness.”