UBS and Switzerland Inch Towards Compromise on Capital Rules

UBS and the Swiss government are in discussions to find a middle ground on capital rules, as both parties weigh the impact of the proposed regulations that followed Credit Suisse's collapse in 2023. The new rules mandate UBS to hold an additional $24 billion in capital, a requirement the bank deems excessive and unaffordable.

Sources suggest that Switzerland might lower this burden to approximately $15 billion, potentially averting UBS's threat to relocate. The bank argues that the stringent measures put it at a disadvantage compared to global competitors and remains critical of the heightened demands though shares rose slightly amid these discussions.

The process remains ongoing, with parliament set to make final decisions next year. Possible adaptations include lowering UBS's foreign capital requirements and allowing some capital needs to be met with AT1 debt rather than the stricter CET1 capital, a move supported by industry leaders aiming to optimize stability and competitiveness.