Swiss National Bank supports measures to increase UBS’s equity capital

SNB supports measures to increase UBS's equity capital Keystone-SDA

The Swiss National Bank (SNB) supports the federal government’s measures to strengthen the capitalisation of UBS’s foreign holdings. The loss potential for the big bank under the various stress scenarios remains substantial.

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Swiss bank UBS already fulfils the “too-big-to-fail” capital requirements that will be implemented by 2030, writes the SNB in its Financial Stability 2025 report published on Thursday. However, the current regulation overestimates the actual resilience of the bank due to the only partial backing of the foreign subsidiaries. The SNB argues it’s important to address this weakness.

Substantial profits from 2026

UBS was able to improve its profitability last year thanks to higher revenues in all divisions, the SNB writes further. This is without the “negative goodwill” from the Credit Suisse takeover. At the same time, the bank’s profitability continues to be burdened by the integration of Credit Suisse.

UBS expects to generate substantial profits once the restructuring programme is completed by the end of 2026. This will enable it to strengthen its “first line of defence”, specifically to absorb losses in the event of a potential stress event.

Postfinance weaker capitalisation

The profitability of the three systemically important domestic banks ZKB, Raiffeisen and Postfinance declined last year. This was driven by the decline in interest business, although Postfinance also reported higher credit losses on loans and bonds in its investment portfolio.

The capital situation for the three banks currently varies, the report continues. Both the risk-weighted capital ratios and the unweighted leverage ratio for Raiffeisen and ZKB were well above the regulatory requirements at the end of 2024. Postfinance exceeds the requirements for the risk-weighted ratio, but is only slightly above the requirements for the leverage ratio.

Translated from German by DeepL/jdp

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