Swiss Lawmakers Vote to Move Ahead on Bank Capital Revamp

(Bloomberg) — Swiss lawmakers voted to stick to the existing timetable for introducing new rules on bank capital quality, meaning that UBS Group AG’s capital requirements for those specific measures are set to rise by some $3 billion.

On Monday, the lower house voted 104 to 86 against delaying the measure by bundling it with other reforms launched after the demise of Credit Suisse, which are likely to lead to a much bigger rise in capital requirements. The immediate change is supposed to update how lenders have to quantify intangible items such as deferred tax assets, in-house software and other hard-to-value items they have on their books.

UBS shares on Tuesday fell as much as 2% in early trading, before paring losses to trade at 31.94 Swiss francs at 10:28 a.m.

Switzerland is revamping financial regulation in the wake of the collapse of Credit Suisse in 2023 and its subsequent purchase by UBS. The firm’s enlarged size has prompted worries that Switzerland won’t be able to bail it out in any future crisis, leading to government demands for as much as $26 billion in extra capital.

Finance Minister Karin Keller-Sutter argued during the debate that doing so would cause significant delay in finalizing the regulation overhaul. Changes by ordinance, including the capital quality measures, were slated to have been introduced by next year at the earliest. Keller-Sutter said Monday those measures could now be implemented on Jan. 1, 2027.

“We take note of the decision rendered by the National Council regarding the motion on a holistic package of banking stability measures,” UBS said in a statement.

Around $23 billion of the potential total requirements are due to a provision requiring the bank to back the capital in its foreign subsidiaries fully at the parent bank. Compared to this, the effect of the new capital quality rules is small, which limits the importance of Monday’s decision to UBS.

The government plans to publish a draft bill to implement the capital backing of foreign units at the end of this month, Keller-Sutter said. In a so-called consultation process, UBS will then have the chance to officially comment on it.

Also included in the raft of measures intended to make the country safer from financial crises are substantial new powers for the financial regulator Finma. Parliament is expected to debate and decide on the changes in 2027, with them taking effect in 2028 or 2029.

–With assistance from Myriam Balezou and Levin Stamm.

(Updates with finance minister comments. A previous version was corrected to insert billion for million in penultimate paragraph)

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