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UBS faces capital rules and scrutiny over Credit Suisse deal

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2026-10-25 14:43 UTC → 2026-10-27 00:31 UTC · added ~~removed~~

The Swiss Council of States has approved stricter capital requirements for systemically important banks, specifically targeting UBS. In a vote of 33 to 10, the Council rejected a milder compromise and instead mandated that foreign subsidiaries be backed by 90 percent Common Equity Tier 1 (CET1) capital. This decision serves as a middle ground between the government’s original 100 percent requirement and a parliamentary minority proposal of 50 percent supplemented by AT1 bonds. UBS has criticized the measure, stating it could cause long-term damage to global competitiveness. While earlier estimates placed the capital burden between $16 billion and $17 billion, more recent indications suggest the requirement could necessitate approximately $23 billion in additional CET1 capital. In response, UBS leadership is evaluating strategic options, including an international merger, splitting the conglomerate, or relocating its headquarters and stock listing to locations such as London or the United States. Potential interested parties for a merger include Morgan Stanley, Deutsche Bank, and Standard Chartered. The Swiss Bankers Association has labeled the move an ‘extreme special path’ that deviates from international standards. The potential for relocation has raised domestic concerns; the Swiss Bank Employees Association warned that up to 12,000 Swiss jobs could be at risk if a relocation or sale occurs. This follows existing plans for 3,000 layoffs related to the Credit Suisse integration. Parallel scrutiny continues regarding the Credit Suisse acquisition. Investigations suggest the 16.5 billion Swiss franc write-down of AT1 bonds may have been a non-negotiable demand from UBS, despite Credit Suisse formally contesting the move before it was issued. Despite the regulatory tension, UBS is forecasting financial growth. Analysts project a 9.1 percent increase in net profit to $2.71 billion and a 24 percent rise in pre-tax profit to $3.52 billion, driven by Global Wealth Management fees and trading.

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