The Swiss government has proposed a new capital standard and is calling for UBS to increase its core capital by $26 billion after the acquisition of Credit Suisse.
The move aims to increase financial stability and prevent future bank crises.
The proposed regulations require UBS to fully capitalize foreign subsidiaries, Reuters reported.
Once the law is enacted, UBS is given a time frame between six and eight years of compliance.
However, UBS expressed strong opposition to capital requirements, labeling it “extreme” and misaligned it with international standards.
The government has shown that the new capital requirements will allow UBS to reduce additional Tier 1 (AT1) bond holdings by $8 billion.
Currently, UBS is only needed to capitalize 60% of foreign units, and there is the option to use AT1 debt to meet some of their capital needs.
UBS executives raised concerns that additional capital requirements could hinder the bank’s competitiveness and affect Switzerland’s position as a financial hub.
The proposal followed the collapse of Credit Swiss Swiss officials, including Finance Minister Karin Keller Sutter, to advocate for stricter regulations to protect taxpayers and the economy.
Keller Sutter, who is currently serving as the revolving president of Switzerland, said the measure is essential to the stability of the financial sector.
The Federal Council is expected to present a proposal for stakeholder consultations in the second half of 2025, and requires Congress’ approval before the law comes into effect in 2028.
However, separate ordinances can be enacted in 2027.
UBS’s Common Equity Tier 1 (CET1) capital ratio should rise from 14.3% to 17%, exceeding the ratio of its major global competitors.
UBS has indicated it does not agree to the proposed capital increase, claiming it should hold approximately $24 billion in additional CET1 capital.
The Swiss government is also proposing reforms to strengthen market regulator FINMA and improve banks’ access to liquidity from the Swiss National Bank.
Last month, UBS Group agreed to pay $5111 million to resolve a US investigation from its subsidiary Credit Suisse Group to promote tax evasion among wealthy Americans.
“The Swiss proposal mandates UBS to increase $260 billion,” was created and published by Private Banker International, a brand owned by GlobalData.
The information on this site is contained in good faith for general information purposes only. It is not intended to be the advice you should resort to, and we will not give any representations, warranties or warranties, whether express or implied regarding its accuracy or completeness. You should seek expert or expert advice before taking or refraining from taking any medication based on the content on our site.
