Swiss Lawmakers Revisit UBS Capital Requirements Amid Competitiveness Concerns

Swiss parliamentarians are once again grappling with a proposal to bolster the capital reserves of UBS, specifically focusing on the core equity (CET1) that absorbs losses. The Council of States' Economy and Taxation Committee is set to review the Federal Council's plan for the third time on August 31 and September 1, having failed to reach a decision in previous meetings.

The government's objective is to make the global financial giant more resilient against future crises. It proposes increasing the capital coverage ratio for UBS's foreign subsidiaries from the current 45% to a full 100%. This measure aims to ensure that these branches are adequately protected by robust capital buffers.

However, UBS has voiced strong opposition to the proposed increase, contending that it would negatively impact its competitive standing in the international market. This argument has found favor among right-wing political parties, suggesting a potential hurdle for the proposal's approval. The committee's repeated deliberations indicate the complexity and sensitivity surrounding the regulation of Switzerland's largest bank.