UBS Faces Setback in Swiss $25B Capital Hike Proposal

UBS Group is facing significant challenges in its attempt to dilute a proposed Swiss government legislation that would require the bank to hold up to $25 billion in additional capital. The draft bill, expected to be unveiled soon, mandates that UBS fully cover potential losses in its foreign subsidiaries by matching 100% of the capital held in those units. UBS has argued that these increased capital requirements would harm its competitiveness compared to international rivals and is considering strategic responses, including the possibility of relocating its headquarters outside Switzerland. The bank is likely to lose the first round of its fight against the legislation, with the Swiss government poised to present the proposal to parliament. UBS shares have dropped over 3% in response to the news, underperforming the broader banking sector due to ongoing uncertainty about the capital requirements. Despite these challenges, UBS reported a $1.7 billion net profit for the first quarter and continues to see strong inflows in wealth and asset management, though analysts currently rate the stock with a 'Hold' recommendation.