Swiss lawmakers propose transferring UBS capital decision to government

Switzerland’s upper house of parliament wants to hand the Federal Council, the country’s executive body, the power to decide how much capital UBS needs to hold. The motion, introduced by Council of States member Andrea Caroni of the center-right FDP, would allow the government to set banking capital regulations through ordinance rather than requiring full parliamentary approval. The stakes are substantial. Government estimates peg the additional Common Equity Tier 1 (CET1) capital requirement at roughly $20 billion, with some analyses suggesting the figure could climb to $22 billion. What the capital fight is actually about At issue is how much of a financial cushion UBS must maintain at the parent level to fully back its foreign subsidiaries. CET1 capital is the hardest, most loss-absorbing form of bank equity. Regulators want UBS to hold enough of it at home to cover its global operations, a direct response to the lessons learned when Credit Suisse collapsed in March 2023 and had to be absorbed by UBS in an emergency government-brokered takeover. UBS has argued publicly that these requirements are extreme and could meaningfully damage its ability to compete with global peers who ...