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Switzerland and UBS could compromise on capital rules, sources say
Published by Global Banking & Finance Review®
Posted on September 29, 2025
5 min readLast updated: January 21, 2026
Global Banking & Finance Review®
Company
Published by Global Banking & Finance Review®
Posted on September 29, 2025
5 min readLast updated: January 21, 2026
UBS and Switzerland are negotiating a compromise on capital rules, potentially reducing the additional capital requirement from $24 billion to $15 billion.
By Ariane Luthi and Oliver Hirt
ZURICH (Reuters) -Switzerland and UBS are signalling in private a willingness to compromise on capital rules, potentially paving the way for parliament to settle on lower requirements acceptable to the government and the bank, according to people familiar with the situation.
UBS has strongly criticised the government's proposed rules - unveiled in June to make the country's banks safer after the 2023 collapse of Credit Suisse - because they would require it to hold $24 billion in additional capital.
The bank says that would put it at a disadvantage to global rivals and it is reviewing a series of mitigation strategies that even include relocating its headquarters abroad.
One person familiar with the government's thinking told Reuters that Bern could be willing to accept rules that would be likely to lower the additional capital burden to somewhere around $15 billion. That is an amount UBS could tolerate, said two other people familiar with the bank's thinking.
UBS on Tuesday reiterated its opposition to current proposals in its official response to a new government consultation on the plans, calling them "disproportionate" and "out of touch with reality".
Shares in the Swiss bank rose on Tuesday, gaining more than 1% by 1230 GMT and outpacing a 0.9% rise in the broader European financial sector.
PROCESS STILL HAS A LONG WAY TO GO
All the sources underlined that the process has a long way to go and nothing is decided. Reuters could not establish whether UBS and the government had discussed possible concessions together. Representatives from both have been invited to a parliamentary committee meeting in early November.
The final decision on the legislation that will cement the new rules will not be made by parliament until next year at the earliest.
The finance ministry said the government was sticking to its proposals and had not signalled a willingness to reduce the additional capital burden to about $15 billion.
"The final decision will be made by parliament and, in the event of a referendum, by the people," the ministry added.
UBS told Reuters it remained opposed to what it called an excessive increase in capital requirements and favoured "targeted, proportionate and internationally aligned" regulatory changes.
"We're optimistic that a reasonable outcome can be achieved," UBS added.
The bank expects authorities to examine feedback on proposed rules and consider alternatives, UBS executive Markus Ronner said on Tuesday, adding that Switzerland has historically implemented proportionate regulation. "From that perspective, our hope is probably not unfounded."
Newspaper Schweiz am Wochenende said at the weekend that centrist and right-of-centre political parties were working on a compromise that pointed towards an extra capital burden of between $10 billion and $15 billion.
"I am convinced that in the end we'll get a result that ensures a better balance between stability and competitiveness," said Roman Studer, CEO of the Swiss Bankers Association, based on discussions with banks, business leaders and lawmakers.
UBS FOREIGN UNITS AT HEART OF CAPITAL DEBATE
Much of the added capital burden centres on the government's desire for UBS to capitalise its foreign subsidiaries to the tune of 100%, up from 60% now, a proposal due to reach parliament next year after a public consultation.
One lawmaker pushing for tougher regulation said, on condition of anonymity, that parliament could eventually meet in the middle, with the requirement lowered to 80%.
The source familiar with the government's thinking said an 80% threshold could be acceptable to Bern.
Such a reduction would lower the extra capital needed close to $15 billion, said two analysts who have crunched the numbers.
Another route to ease the burden would be to allow UBS to cover part of it with so-called Additional Tier 1 (AT1) debt instead of Common Equity Tier 1 (CET1) capital as proposed.
UBS held about $19 billion in AT1 debt at the end of June. Incorporating that could lower the total add-on to a tolerable level for the bank, one source said.
"It must be possible to use AT1 as collateral," SBA's Studer said. "We should actually be able to agree on this."
The parliamentary process means that the final capital requirements will only become clear next year at the earliest.
UBS is under pressure from investors to find an acceptable solution. Its shares, while rallying in recent months, continue to lag peers this year.
One of its largest shareholders, activist investor Cevian, said this month that the proposed rules would make UBS uncompetitive, even if watered down, and urged the bank to move abroad.
(Reporting by Ariane Luthi and Oliver HirtAdditional reporting by Dave GrahamEditing by Tommy Reggiori Wilkes, Mark Potter, Louise Heavens and David Goodman)
UBS has strongly criticized the government's proposed rules, calling them 'disproportionate' and 'out of touch with reality'. The bank opposes the excessive increase in capital requirements.
There are discussions about lowering the additional capital burden to around $15 billion, with some sources suggesting an 80% capitalisation requirement for UBS's foreign subsidiaries.
Shares in UBS rose by more than 1% on Tuesday, outpacing a 0.9% rise in the broader European financial sector, indicating a positive market response amid the ongoing discussions.
The proposed rules could put UBS at a disadvantage compared to global rivals, prompting the bank to consider mitigation strategies, including potentially relocating its headquarters abroad.
The final decision on the legislation that will cement the new rules will not be made by parliament until next year at the earliest.
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