Swiss lawmakers signal compromise on UBS capital requirements

Swiss lawmakers are signaling a potential compromise on stringent capital requirements for UBS, aiming to ease the burden on the country's largest bank. Executives have expressed frustration with the government's initial proposals, warning they could harm Switzerland's competitiveness as a financial center.

Senior parliamentarians have privately assured UBS executives that they will "water down" new rules as Bern finalizes a decision on the bank's capital holdings. The government's decision, expected as soon as April, follows a reform package unveiled last year by Swiss Finance Minister Karin Keller-Sutter in response to the 2023 collapse of Credit Suisse. Regulators argue the rules are necessary to protect depositors, while critics contend they will harm the nation's financial standing.

A core group of lawmakers believes the capital requirements are too stringent and has indicated to UBS they would seek a compromise. However, any proposal could face opposition from other parties. UBS executives have warned that failure to reach a compromise might lead the bank to seek a more favorable jurisdiction. The finance ministry previously rejected a compromise proposal that would have allowed UBS to use additional tier one debt to meet half of the new capital demands.

A key parliamentary economic affairs and taxation committee is set to take over the process in May, granting more decision-making power. The proposals are then likely to be debated by lawmakers from June.