UBS Capital Bill Vote Postponed as Lawmakers Run Out of Time
(Bloomberg) — The upper house of Switzerland’s parliament postponed a vote over UBS Group AG’s capital requirements after lawmakers exceeded the time allotted for the debate.
A vote on the matter has been set for Sept. 23 following remarks from Finance Minister Karin Keller-Sutter. The chamber went ahead with the debate on Thursday after a lawmaker who’d proposed handing the decision back to the government withdrew the motion.
The draft law, which could entail as much as $20 billion in fresh capital requirements for Switzerland’s biggest bank, will now continue its path through both houses as initially planned. Keeping the debate in parliament means there’s a higher chance that the final law will differ from what the government wants.
The key element of the Federal Council’s reforms is that UBS should back the full value of its foreign subsidiaries with the highest-quality capital, CET1, at home. UBS has called those proposals “extreme” and argued that they would make it uncompetitive.
UBS has gained some support for its position in parliament, and lawmakers in the upper house’s influential Economic Affairs and Taxation Committee have sought to broker a compromise. Its proposal would allow UBS to use a type of hybrid debt known as AT1 bonds to meet half of the new capital requirements. This would substantially reduce the need for UBS to find fresh equity capital as a result of the new rules.
That effort, however, is less likely to find support among left-of-center lawmakers.
AT1 bonds “can’t absorb losses” during the stabilization phase of a bank, said Social Democrat lawmaker Eva Herzog, one of the critics of the compromise. “That’s smoke and mirrors. Only CET1 can absorb losses.”
Lawmakers must now decide whether they back the government’s proposal, the one endorsed by the committee, or one of the other options on the table.
While lawmakers in the Swiss parliament generally follow their committees, Thursday’s debate revealed substantial support for a separate plan that the bank must back 90% of the value of its foreign units with the highest-quality capital, known as CET1.
That would amount to watering down the government plan slightly, but not as much as the committee wants. Delegates from the centrists as well as the right-wing Swiss People’s Party — two strong groups — spoke out in favor of that plan on Thursday. That leaves next week’s vote open.
Lawmakers on Thursday dismissed the option of keeping the current capital rules for UBS. That means that all plans debated by the upper house now aim for increasing requirements for the bank.
The result of the Sept. 23 ballot will be passed to the lower house, likely later this year, for further debate. A final ruling on the capital reforms isn’t likely until next year at the earliest.
The debate over UBS’s regulation has weighed on the bank’s share price over the past two years and caused uncertainty over investor payouts. The bank has even considered moving its headquarters out of the country in response to what it sees as over-regulation, people familiar with the matter have said previously.
Lawmakers are seeking to balance preventing a future financial crisis from overwhelming the resources of the state, with preserving the competitiveness of Switzerland’s financial center.
“We don’t want UBS to leave the country, and also not that it’s taken over by foreigners,” said centrist lawmaker Pirmin Bischof.
–With assistance from Isabel Demetz and Myriam Balezou.
(Updates with more details on debate from ninth paragraph.)
©2026 Bloomberg L.P.
