Swiss Lawmakers Weigh UBS Capital Requirements

The proposed bill aims to force the Zurich-based lender to hold significantly more Common Equity Tier-1 (CET1) capital, a move prompted by the 2023 collapse of Credit Suisse. Current government drafts demand that foreign units be fully capitalized, a jump from the existing 60% threshold. UBS executives maintain that such strictures would stifle their competitive edge in international markets.

Members of the economic affairs and taxation committee are now considering amendments to soften this fiscal weight. Hannes Germann of the Swiss People's Party signaled that a compromise is gaining traction, noting that banking inherently requires a degree of risk. A potential solution involves permitting the use of Additional Tier 1 (AT1) capital to satisfy a portion of the mandate. While AT1 debt is less costly for the bank, it serves as a loss-absorbing buffer during financial distress. Lawmaker Thierry Burkart suggested that if regulators can make these bonds more secure, a deal balancing institutional stability with corporate flexibility remains within reach.