Swiss lawmakers push for swift decision on UBS capital rules

07:45

Swiss lawmakers have launched discussions aimed at rapidly deciding new capital requirements for UBS Group AG, the country’s largest bank. The debate reflects growing urgency to clarify financial regulations in the wake of recent banking sector upheavals.

Parliamentary sources indicate that authorities are seeking to accelerate the decision-making process, with key committees expected to weigh in before the issue reaches broader legislative approval.

Competing approaches to capital requirements

At the center of the debate is whether UBS should fully back its foreign operations with high-quality capital, known as Common Equity Tier 1 (CET1), or be allowed to rely partly on Additional Tier 1 (AT1) instruments, which are generally less costly but also considered riskier.

Supporters of a more flexible approach argue that allowing the use of AT1 capital could improve the bank’s competitiveness on the global stage. However, critics—including government officials and academic experts—warn that such instruments may not provide sufficient protection during financial stress.

Reforms shaped by past banking crises

The push for stricter regulation follows the collapse of Credit Suisse in 2023, which led to a major restructuring of Switzerland’s banking sector and left UBS as the country’s only globally significant bank.

Finance Minister Karin Keller-Sutter has been a strong advocate for tighter oversight, emphasizing the need to reinforce financial stability and restore confidence in the system.

Economic stakes and market implications

UBS has expressed concern over the proposed rules, describing some measures as excessive. The bank has indicated that its future financial strategies, including share buybacks planned for 2026, will depend on regulatory clarity.

Analysts estimate that stricter requirements could force UBS to raise around $20 billion in additional core capital. A preliminary decision could be reached in the coming months, with parliamentary approval potentially finalized later in the year.