The Swiss Ständerat approved a new capital requirement for UBS, obliging the bank to fund its foreign subsidiaries with 90% Common Equity Tier 1 (CET1) – essentially share capital and retained earnings. The earlier compromise, backed by UBS CEO Sergio Ermotti, called for a 50% CET1 and 50% Additional Tier 1 (AT1) split, but it was rejected in the full chamber.
The decision, which applies over a seven‑year horizon, raises the bank's hard‑capital buffer and aligns Swiss standards with the higher end of international expectations. Analyst Alex Becker of Zürcher Kantonalbank (ZKB) notes that higher CET1 is “ceteris paribus” positive for creditors, offering a modest upside for senior unsecured bondholders through increased earnings retention.
Becker cautions that the impact on ordinary UBS bondholders may be limited, but the uncertainty surrounding UBS's response – such as potential divestments abroad or a relocation of its headquarters – could constitute a credit event and trigger a rating review. The time factor remains a key variable for the bank.
ZKB maintains its ratings for UBS Group (HoldCo) at A and for the operating company (OpCo) at AA, both with a stable outlook. The analyst also points out that the 90/10 requirement places Swiss banks at the top end of global capital standards, a stance understandable from the issuer’s perspective.
UBS remains a major issuer in international bond markets, with more than $300 billion of long‑term liabilities, including covered bonds, senior unsecured notes and AT1 instruments, spread across both its holding and operating companies.
