Swiss upper house votes for 90% CET1 capital backing plan, in blow to UBS
Lawmakers backed a compromise that could force UBS to add as much as $20 billion in CET1 capital.
- On Wednesday, the Swiss Council of States voted 29 to 16 to mandate that UBS back 90% of its foreign units with common-equity Tier 1 capital, marking a significant regulatory tightening for the lender.
- Swiss authorities sought to make the country's sole global bank crisis-proof following the 2023 emergency rescue of Credit Suisse, with the Federal Council originally pushing for 100% equity backing to ensure stability.
- UBS Chief Executive Officer Sergio Ermotti and Chairman Colm Kelleher warned lawmakers the proposal could harm competitiveness, as the bank preferred using AT1 securities covering only 60% of foreign unit value under current rules.
- Finance Minister Karin Keller-Sutter dismissed concerns that the requirement would restrict dividend payouts, noting UBS holds sufficient funds; UBS shares remained little changed following the vote, avoiding the $20 billion capital injection initially estimated.
- The bill now advances to the lower house, where debate is expected late this year, though a final ruling remains unlikely until 2027 at the earliest and could proceed to a public plebiscite.
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31 Articles
Swiss National Bank (SNB) Vice President Antoine Martin said a 90 percent primary core capital requirement (CET1) behind UBS's foreign subsidiaries could be considered a good measure after the Swiss parliament's upper house voted on the new banking regulation.
The UBS Group stated that it will continue to fight a political pressure to dramatically increase its capital demands, after parliamentarians supported most of the government's plan on Wednesday (23) to make the global wealth manager more resilient to the crisis. Exclusive material for subscribers. To have full access, access the link of the subject and register.
Nation's largest bank would have to cover 90% of value of foreign subsidiaries with high-quality equity capital
MEPs voted in favour of an increase in CET1 capital to 90% for subsidiaries abroad, a level lower than 100% demanded by the government. UBS and the economic umbrellas fear a loss of competitivenessThis is a step forward in the long political process that will determine the future regulatory framework that will apply to UBS, the only Swiss bank of systemic importance at global level. More than three years after the disappearance of Credit Suisse,…
The stricter capital requirements adopted by the Council of State for Grossbank trigger conflicting reactions. The lines of conflict in the capital dispute remain hardened.
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