UBS has opposed Swiss government plans to tighten bank capital rules after the collapse of Credit Suisse, warning the reforms would raise its costs sharply, hurt the country’s competitiveness and weigh on the wider economy.
In its formal response to a government consultation on the reform package, UBS said the reform package – centred on forcing the bank to fully capitalise its foreign subsidiaries – is “excessive, disproportionate, not internationally aligned and not targeted”.
The bank estimated the plan would increase its capital needs by about $23–24bn, mainly through additional Common Equity Tier 1 capital.
UBS said the additional requirements would lift its annual costs by around $1.7bn and “jeopardise the continuation of the successful UBS business model”.
It argued the proposals are based on “extreme” assumptions and would make Switzerland uncompetitive compared with other financial centres, noting that “the [government’s] proposals would significantly increase the requirements and would contrast sharply with developments in Europe and the US, where deregulation initiatives have already been announced”.
The bank said regulatory uncertainty since the announcement of an update to Switzerland’s regime in April 2024 has already hit investors.
UBS calculated that its market value underperformed European and US banking peers by 27% between April 2024 and the end of last year, amounting to about $37bn in lost shareholder value, in addition to roughly $14bn in costs tied to integrating Credit Suisse.
UBS argued that alternative options “which would have an equivalent effect at lower cost” had “not been given adequate consideration”, adding: “The [government] has rejected these [alternative proposals] because they do not meet the extreme objective of zero risk tolerance.”
The bank called for Additional Tier 1 instruments and bail-in bonds to be counted towards meeting stricter requirements and for AT1s to be treated in line with practice in the European Union and United Kingdom.
Swiss authorities outlined the capital reforms in June as part of efforts to avoid another Credit Suisse-style failure and to shield taxpayers, after UBS acquired its former rival in a state-orchestrated rescue in 2023.
The reform package also includes measures to strengthen the quality of UBS’s capital base and remains subject to parliamentary approval, with potential revisions still possible.
The Swiss Bankers Association (SBA) backed UBS’s concerns, arguing the proposals are disproportionate, misaligned with global standards and risk undermining Switzerland’s standing as a financial centre without materially enhancing stability.
