UBS faces $17B extra capital after parliament vote, Goldman says

Switzerland’s upper house just handed UBS the regulatory equivalent of a very expensive homework assignment. The Swiss Council of States voted 29-16 to require the country’s largest bank to hold 90% Common Equity Tier 1 capital backing for its foreign subsidiaries at the parent level, a move that Goldman Sachs and Citigroup estimate would force UBS to raise roughly $17 billion in additional capital. UBS labeled the decision excessive and warned it could damage its competitive position against global peers operating under friendlier capital regimes. What the vote actually means The 90% threshold approved on September 23 represents a compromise of sorts. The Swiss government’s original proposal demanded a full 100% CET1 backing. Earlier discussions had floated the possibility of letting UBS lean more heavily on Additional Tier 1 bonds, a cheaper form of capital that sits lower in the loss-absorption hierarchy. The upper house split the difference, landing on 90%. The bank’s own internal estimate pegs the parliamentary measure’s impact at around $16 billion, with a separate $2 billion burden expected from upcoming ordinance changes, totaling roughly $18 billion in fresh capital demand...