The Swiss Ständerat postponed a planned vote on stricter capital requirements for UBS, delaying it to Wednesday morning, as lawmakers sought to debate multiple proposals before reaching a decision. The delay comes ahead of a government proposal to impose additional core capital requirements of around $20 billion on the bank, following the 2023 collapse of Credit Suisse and its subsequent acquisition by UBS. The measure aims to prevent a repeat of financial instability by reinforcing UBS’s resilience, particularly in its foreign subsidiaries, which are a major cost driver under the new rules.
The Federal Council’s proposal mandates that foreign branches be fully backed by hard core capital, a requirement the bank opposes, as it would reduce funds available for growth and shareholder distributions. Instead, the Ständerat’s Economic Affairs Commission proposed a compromise: 50 percent hard core capital and 50 percent AT1 convertible bonds, which are less costly for UBS. Commission President Erich Ettlin emphasized the balance between public safety and maintaining Switzerland’s competitive financial sector. Meanwhile, a third proposal, supported by Mitte lawmaker Peter Hegglin, called for 90 percent capital backing, arguing it would signal greater stability to investors.
UBS has not commented on the Ständerat’s deliberations. The vote is part of a broader parliamentary process; the Nationalrat is expected to address the issue in December, with both chambers ultimately required to agree on a final proposal. Even if the parliament adopts a less stringent measure, the Social Democratic Party has signaled it may push for a public referendum if the legislation falls short of the government’s original mandate.
The delay underscores the complexity of reforming UBS’s capital structure, which remains a focal point for regulators seeking to bolster financial stability after Credit Suisse’s failure. The bank’s position on the AT1 and hard capital requirements reflects broader tensions between regulatory demands and operational flexibility in Switzerland’s financial hub.
