Swiss Panel Backs Softer Capital Rule for UBS Foreign Units
Swiss lawmakers propose allowing UBS to use cheaper capital for foreign subsidiaries, softening government's 100% CET1 requirement.
A Swiss parliamentary committee has moved to ease proposed capital requirements on UBS, recommending that the bank back its foreign subsidiaries with only 50% Common Equity Tier 1 (CET1) capital. The decision, announced on Monday, marks a setback for the government, which had pushed for a full 100% CET1 backing.
The economic affairs and taxation committee of the upper house, tasked with reviewing banking regulations after the Credit Suisse collapse, suggested that UBS could use Additional Tier 1 capital—a less costly form of funding—to cover the remaining 50% of its overseas units' capital needs.
Lawmakers are seeking a balance between protecting taxpayers from future banking crises and addressing UBS's concerns that stringent requirements could hurt its global competitiveness. The government had wanted UBS to hold roughly $20 billion in extra CET1 capital to strengthen financial stability following its emergency takeover of Credit Suisse in 2023.
UBS has argued that such a requirement is excessive, warning it would undermine its competitive position and damage Switzerland's banking sector. The committee's proposals now move to a vote in the upper house, after which they will be reviewed by the lower house—where the bank may encounter stricter scrutiny.