Swiss Government Imposes Stricter Capital Rules on UBS

The Swiss government's latest proposal demands stricter capital regulations for UBS in the wake of its acquisition of Credit Suisse, potentially requiring the bank to increase its core capital by $26 billion. This move aims to stabilize the financial sector but has elicited criticism from UBS, which labels the regulations as 'extreme' on an international scale.

UBS shares initially rose by 7% following the announcement, marking a significant shift after months of speculation and uncertainty. Despite the positive market reaction, UBS executives argue that the additional capital burden could hamper the bank's competitiveness. The Zurich-based financial giant is also considering contingency plans, including a possible headquarters relocation.

Finance Minister Karin Keller-Sutter has emphasized that these regulations are critical for economic stability and taxpayer protection. The consultation process is set for 2025, with laws potentially taking effect in 2028, highlighting a long political journey ahead. The implications for UBS's future strategies remain uncertain as stakeholders prepare for changes.

(With inputs from agencies.)