Swiss Lawmakers Debate Fast-Tracking New UBS Capital Regulation Decision
Overview of the UBS Capital Regulation Debate
By Ariane Luthi
Introduction to the Debate
ZURICH, May 4 (Reuters) - Swiss lawmakers want to decide swiftly on new capital rules for banking giant UBS as they kick off the debate on Monday into whether to stick with or soften the proposed regulations, parliamentary sources said.
Government Proposals and Lawmaker Compromises
Up for debate are the government's proposal to make UBS fully back its foreign units with Common Equity Tier 1 (CET1) capital, and a compromise pitch by lawmakers that could let it partly use less expensive Additional Tier 1 (AT1) capital instead.
The concession aims to boost UBS's competitiveness, but the government and academics say AT1 capital's loss-absorbing capacity is too limited.
Regulatory Context and UBS Response
Urged on by Finance Minister Karin Keller-Sutter, Switzerland is tightening regulations after the collapse of Credit Suisse in 2023 left UBS as the country's sole big global bank.
UBS - which has criticised the regulatory plans as "extreme" - said last week its share buyback plans for 2026 depend on getting more clarity on the banking rules, which could mean it must find around $20 billion in additional core capital.
A speedy ruling by the influential Economic Affairs and Taxation Committee on UBS's key capital requirements could move the item to parliament's upper house in June, followed by a final decision in the lower house by autumn at the earliest.
Parliamentary Chambers Divided on UBS
PARLIAMENTARY CHAMBERS DIVIDED ON UBS
Upper House Perspectives
The upper house committee that will first debate the banking bill is widely seen as sympathetic to UBS's argument that costly regulation will hurt its business and the economy.
Lower House Dynamics and Party Positions
But the bank could face a tougher reception in the lower house committee and on the floor of parliament. Which side prevails will largely depend on lawmakers of centrist parties and moderates needed to build majorities.
Party Seat Distribution and Stances
The leftist Social Democrats and Greens, which back the government's tougher stance on UBS, together hold 11 of the upper house's 46 seats, and 64 of the 200 lower house seats.
The right-wing Swiss People's Party (SVP) and the business-friendly Liberals (FDP), which are expected to broadly back softer rules, together hold 19 upper and 94 lower house seats.
While some Centre Party and Green-Liberal lawmakers have voiced support for UBS's position, it is unclear how united the parties are, and how many in the FDP will defy their party colleague Keller-Sutter over her plan for tougher rules.
Reporting Credits
(Reporting by Ariane LuthiEditing by Dave Graham and Susan Fenton)
