Switzerland prepares new capital rules that could shape UBS’s future

09:45

Switzerland is expected to finalize stricter capital requirements for UBS this month, a move that could significantly influence the future of the country’s largest bank and potentially affect its decision to remain headquartered in Switzerland.

Following the 2023 collapse of Credit Suisse and its government-backed acquisition by UBS, Swiss authorities have vowed to strengthen regulations for the nation’s sole remaining global bank. Under the proposed draft law, UBS may be required to fully fund its foreign subsidiaries with Common Equity Tier 1 (CET1) capital, a measure UBS has deemed excessive.

The government stresses that the overhaul is essential to ensure financial stability, noting that UBS’s balance sheet is roughly twice the size of Switzerland’s economy. While Parliament will have the final say on these capital rules and could reduce their stringency, concessions on certain aspects, such as qualifying core capital, are anticipated.

Investors have expressed concern that overly strict requirements could make UBS less competitive internationally, highlighting the delicate balance between safeguarding stability and preserving the bank’s global operations.