Swiss Lawmakers Back Tougher UBS Capital Rules

Switzerland’s upper house of Parliament has supported a plan to impose tougher capital requirements on UBS, rejecting a compromise that would have significantly reduced the amount of common equity the bank must hold against its foreign subsidiaries, the Financial Times reported.

Lawmakers supported a plan requiring UBS to cover 90 percent of the value of its foreign subsidiaries with common equity tier one (CET1) capital. The 90 percent plan is close to the government’s proposal to require UBS to cover 100 percent of the value of its foreign subsidiaries with CET1 capital. An alternative favored by UBS would instead have allowed cheaper additional tier one (AT1) debt to cover up to half of the required capital backing. Under current rules, UBS must cover 60 percent of the value of its foreign subsidiaries with capital, a quarter of which can be met with AT1 instruments.

UBS said the 90 percent requirement would force it to hold about $16 billion of additional CET1 capital at its parent bank. “This political outcome is not a compromise and fails to address the root causes of the Credit Suisse collapse,” the bank said. Chief Executive Sergio Ermotti has argued that the 90 percent requirement is effectively little different from the government’s full-backing proposal.

Finance Minister Karin Keller-Sutter has resisted efforts to soften the reforms, calling the UBS-favored alternative “a solution in favour of the bank and against taxpayers.” The capital requirements form part of a broader “too big to fail” package developed after UBS’s state-orchestrated takeover of Credit Suisse in 2023. The wider reforms include measures to strengthen regulatory powers, recovery and resolution planning, and liquidity requirements.

The proposal now moves to Parliament’s lower house, with a final decision unlikely before next year. UBS has called the government’s capital plans “extreme” and warned they could weaken its international competitiveness. Executives have reportedly raised the possibility of moving the bank’s headquarters privately, although UBS has publicly said it remains committed to operating as a global bank headquartered in Switzerland.