UBS Reaffirms Criticism of Switzerland’s Planned Capital Reforms

(Bloomberg) — UBS Group AG reiterated its scathing critique of Switzerland’s planned overhaul of banking regulation as it continues its effort to water down the proposals.

“UBS objects to the extreme capital measures because they are neither proportionate nor internationally aligned,” it said in a report published on its website Tuesday. “The costs of the far-reaching measures would significantly weaken UBS’s competitiveness nationally and internationally.”

The Swiss bank is facing as much as $26 billion in new capital demands as a result of regulation changes proposed by the Swiss government in June. UBS has since labeled the plans as “excessive” and said it’s studying options to mitigate the expected impact.

Last week, the government proposed giving UBS seven years to phase in full capital backing for foreign subsidiaries, a change that’s expected to account for the biggest chunk of the higher capital requirements. With the law unlikely to take effect before 2028, UBS would have until 2035 to build up the buffer.

UBS, political parties and other interested groups have until Jan. 9 to give feedback to the government, which will then finalize the proposals and submit them to parliament.

UBS’s capital reserves have been a cause for concern for the Swiss authorities since its local rival Credit Suisse almost collapsed in 2023 and was bought by UBS in an emergency rescue.

UBS has said that the proposals in their current form are the wrong answer to that crisis. It has also said they would put the bank at a disadvantage to its competitors.

The current proposals would require UBS to fully deduct investments in foreign subsidiaries from a regulatory buffer known as CET1 capital.

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