Switzerland Proposes Stricter Capital Rules for UBS, Bank Disagrees
Switzerland's government has proposed stricter capital requirements for UBS Group AG, with a phased-in period starting in 2028. The changes, supported by the Swiss financial regulator Finma, could significantly increase UBS's capital demands over the next decade. UBS, however, has expressed strong disagreement with the proposed increase.
The government plans to give UBS up to seven years to fully comply with the higher capital requirements, aiming for a 100% Common Equity Tier 1 (CET1) ratio coverage of its foreign subsidiaries. The consultation on the legislative proposal began in September 2025 and the law is expected to come into force by the end of 2025 or early 2026.
Initially, UBS must provide a CET1 ratio of 65% for its foreign subsidiaries, with an annual increase of 5% until it reaches the 100% target. If adopted, these reforms would make UBS's CET1 ratio at least 50% higher than the average of global systemically important banks. The proposed changes could increase UBS's capital demands by up to $26 billion.
UBS is exploring options to mitigate the impact of the new requirements, including technical measures and potential shifts in its domicile.
The Swiss government's proposed capital requirements for UBS aim to enhance the bank's resilience and protect its foreign subsidiaries. The phased-in approach allows UBS time to adjust, but the bank remains concerned about the excessive nature of the proposed increase. Stakeholders have until Jan. 9 to comment on the draft law, with the full implementation expected by 2035.
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