SNB Vice Chair Urges Swift Adoption of Stricter UBS Capital Rules

The Swiss National Bank (SNB) has again thrown its weight behind government proposals to impose stricter capital requirements on UBS, as lawmakers prepare for another round of negotiations on the reform package.

Speaking at an event at the University of Basel on Wednesday, SNB Vice Chairman Antoine Martin argued that the collapse of Credit Suisse in 2023 exposed significant weaknesses in Switzerland's regulatory framework, particularly regarding capital buffers and collateral readiness.

Martin stressed that the urgency of reform has grown because UBS now dominates the domestic banking landscape. The lender held roughly a quarter of Swiss deposits and loans in 2024, up from 14% of loans and 16% of deposits in 2022, before the emergency takeover.

"It is all the more important that Switzerland implement sound 'too big to fail' regulations and address these weaknesses, given the increased concentration and size of the Swiss banking sector relative to Swiss GDP," Martin said.

The government's plan would require UBS to fully back its foreign subsidiaries with Common Equity Tier 1 capital, a move designed to shield taxpayers from future bailouts. UBS has pushed back, arguing the measure would force it to hold roughly $20 billion in additional core capital and would hurt its global competitiveness.

Parliamentary discussions stalled earlier this month when a committee failed to reach consensus. Lawmakers are scheduled to reconvene on Monday to seek a compromise.

Martin defended the proposed reforms as essential for financial stability, which he described as a precondition for the SNB's primary objective of price stability. He said the full backing of foreign participations with "hard capital" would make the Swiss financial system more resilient.