The Swiss upper house (Ständerat) approved new capital requirements for systemically important banks on Wednesday, passing the measure by 33 votes to 10 with two abstentions. Under the rule, foreign subsidiaries must be financed at least 90% with Common Equity Tier 1 (CET1) capital. Although the legislation formally applies to all systemically relevant banks with overseas stakes, it currently affects only UBS.
The decision was driven by a minority faction of the Ständerat’s Economic Commission (WAK‑S) led by middle‑canton representative Peter Hegglin. The commission’s majority had backed a more moderate proposal that would have required a minimum of 50% CET1, allowing the remaining portion to be covered by Additional Tier 1 (AT1) instruments. The Federal Council had initially advocated a 100% CET1 requirement.
Three options were on the table: the Federal Council’s 100% CET1 model, the WAK‑S majority’s 50% CET1‑50% AT1 compromise, and the minority’s 90% CET1 proposal, which ultimately won. UBS had publicly opposed the stricter alternatives, arguing that a 90% CET1 threshold fell short of the Federal Council’s 100% goal and could harm the bank’s international competitiveness.
According to calculations by the Federal Council, the originally planned full‑coverage rules would increase UBS’s CET1 requirement at its Swiss headquarters by roughly $20 billion. UBS estimates the additional burden at about $22 billion. The bank warned that the new rules could undermine its ability to compete globally.
The vote marks a significant tightening of capital buffers for Switzerland’s largest bank and signals a more rigorous regulatory stance toward systemically important financial institutions.
