Key facts
- Swiss business groups are lobbying parliament against proposed stricter capital rules for UBS.
- The groups argue the rules risk being "excessive" and would disadvantage UBS against international rivals.
- The government calculates its proposed measures would require UBS to hold an additional $20 billion in capital.
- Lawmakers are deciding between three proposals for UBS's foreign unit capital backing: 100% CET1, 90% CET1, or a 50% CET1 and 50% AT1 bond mix.
- UBS estimates the 50% AT1 option would require an additional $13 billion in capital.
- The business groups are urging lawmakers to back the 50% AT1 capital compromise.
Swiss business groups have urged lawmakers to reject proposed capital rules for UBS, warning that "excessive" regulation could harm the bank's competitiveness and increase financing costs for industry. The lobbying effort comes ahead of a vote in the upper house of parliament on reforms aimed at strengthening banks following the 2023 collapse of Credit Suisse.
The government's proposals, designed to protect taxpayers from future banking meltdowns, would require UBS to hold an additional $20 billion in capital. Business leaders argue this would place UBS at a significant disadvantage compared to its international rivals.
Lawmakers are considering three options for how UBS should back its foreign units with capital: a 100% Common Equity Tier 1 (CET1) backing, a 90% CET1 proposal, or a compromise involving 50% CET1 and 50% Additional Tier 1 (AT1) bonds. UBS estimates that the 50% AT1 option would necessitate finding an additional $13 billion in capital.
Both UBS CEO Sergio Ermotti and Chairman Colm Kelleher have publicly called for more moderate rules, stating that while the 50% AT1 option would be challenging, it would be manageable. The business groups echoed this sentiment in a letter dated September 18, advocating for the 50% AT1 compromise as a measure that strengthens systemic stability without weakening the financial center or worsening financing conditions for companies.