Swiss Parliament Adjourns UBS Capital Rule Vote Until Next Week

The Swiss upper house of parliament postponed a vote on stricter capital rules for UBS until next Wednesday, following a prolonged debate that extended into Thursday. The delay reflects ongoing disagreements over how to implement reforms following the 2023 collapse of Credit Suisse, which prompted the creation of new banking regulations. UBS Chairman Colm Kelleher emphasized that the bank’s priority remains staying in Switzerland and contributing to the country’s economy, though he acknowledged potential relocation risks if stricter capital requirements become uncompetitive. The original proposal required UBS to hold an additional $20 billion in Common Equity Tier 1 (CET1) capital for its foreign subsidiaries, a move that would have doubled their current 60% CET1 backing requirement. Instead, a compromise agreed by a committee in late August proposed a 50% CET1 and 50% Additional Tier 1 (AT1) capital structure, reducing the cost to $13 billion—down from the $20 billion under the government’s initial plan. UBS has already injected $15 billion in capital since acquiring Credit Suisse in 2023. The revised approach aligns more closely with international standards while easing the financial burden on the bank. However, alternative proposals gaining traction in parliament call for a 90% CET1 requirement, raising concerns about the bank’s ability to compete domestically. Shareholders and regulators had previously assumed UBS would avoid such capital pressures, but Kelleher acknowledged the new regulatory environment has introduced unexpected challenges.