The Swiss Council of States (Ständerat) voted 33-10 with 10 abstentions on Wednesday to require UBS to cover its foreign subsidiaries with 90% hard equity capital — a significantly tougher standard than previously proposed and one that sharpens the economic trade-offs facing Switzerland's financial center.
Finance Minister Karin Keller-Sutter secured a result that exceeded expectations. The advisory Economic Affairs Committee (WAK-S) had earlier recommended a more moderate split: 50% hard core capital and 50% additional core capital structured as AT1 instruments.
The debate in the upper chamber grew increasingly acrimonious. WAK-S chairman Erich Ettlin said those who advocate for the financial center or UBS are portrayed in politics and media as "corrupt, malicious or incapable." Keller-Sutter contributed to the polemic by questioning whether additional capital would strengthen the Swiss parent or instead flow to shareholders through dividends and buybacks, arguing that behaviour of that kind does not reflect the importance of the Swiss financial platform.
The government's case rested on financial stability and the lessons of Credit Suisse's collapse in 2023. Keller-Sutter noted that UBS benefits from a de facto state guarantee, amounting to a subsidy for taxpayers. Reducing the probability of another bailout is a legitimate political aim, but the Ständerat's vote did not resolve the question of proportionality. The too-big-to-fail rules introduced after UBS's 2008 rescue did not prevent Credit Suisse's failure.
The 90% requirement will raise UBS's capital binding and make international business more expensive. Keller-Sutter herself acknowledged in the chamber that growth in US investment banking would become costlier. Banks do not simply absorb higher capital costs; they reassess return targets, reprice products, scrutinize investments and cut expenses. The Federal Council argued that because the rules target foreign subsidiaries, the Swiss business need not be burdened. That assurance warrants caution: UBS operates as a global group, and weakened profitability in any segment will prompt management to reallocate capital and staff toward the most efficient deployments. For a high-cost financial center like Zurich, that is a consequential question.
Unspoken in much of the debate has been the employment impact. Rumours on the local financial market suggest up to 10,000 positions could be jeopardised or relocated abroad under the stricter regime, with Zurich singled out as especially exposed. The figure should be treated as a warning signal rather than a precise forecast, but it would be naive to assume that a material increase in the cost of capital and international business would leave cost structures and headcount untouched. UBS has signalled awareness of its special role in the Swiss economy during the Credit Suisse integration, yet the economic arithmetic remains unavoidable.
Financial stability and competitiveness need not be pitted against each other; Switzerland needs both. Notably, many centre-right MPs backed the tougher line — including FDP members, a party that has long shaped the Swiss banking sector and supplied its leadership. The expectation that some FDP councillors prioritized backing their federal minister is hard to dismiss.
The legislation now proceeds to the Nationalrat, where a correction remains possible.
