Swiss lawmakers pitch compromise on capital rules for UBS

ZURICH, Dec ‌12 (Reuters) - A group of Swiss lawmakers has proposed a compromise between tougher ‍capital ‌rules for UBS and ensuring the bank remains internationally competitive, the Neue Zuercher ⁠Zeitung newspaper reported on Friday.

The Swiss ‌government has proposed that UBS, Switzerland's sole remaining global bank since it acquired Credit Suisse in 2023, should capitalise its foreign subsidiaries by 100% rather than 60% at present, to ⁠cover potential losses abroad.

That requirement forms the core of reforms that the bank says would mean finding ​an additional $24 billion in capital. The government has proposed ‌UBS use Common Equity Tier 1 (CET1) ⁠capital to meet those requirements.

Under the proposal from the group of lawmakers, UBS should be allowed to use so-called Additional Tier 1 (AT1) debt to cover ​up to 50% of the capitalisation requirement for its foreign units, which would reduce the burden on the bank.

Lawmakers from the right-wing Swiss People's Party, the centre-right Liberals (FDP), the Centre Party and the centrist Green-Liberal Party are behind the ​proposal, ‍according to one of them, ​Thierry Burkart, a former FDP leader.

Their proposal, seen by Reuters, backs setting capital rules for UBS that are the strictest worldwide overall.

"However, the gap to the regulations of leading financial centres in the EU, UK, USA, and Asia must never be so large as to compromise competitiveness," the document says, urging Switzerland to ⁠find a balanced solution.

The plan also floats capping investment banking operations at 30% of risk-weighted assets on the bank's balance ​sheet.

UBS said the proposal took a "more constructive direction than the extreme approach" of the government, but argued Switzerland already has the world's strictest capital rules.

To that end, the bank urged the regulations be "proportionate and internationally ‌aligned".

Last week, Reuters reported that the Swiss government was set to soften part of the incoming regulations.

(Reporting by Dave Graham and Oliver Hirt. Editing by Mark Potter)