UBS Challenges Swiss Capital Hike, Citing Global Standards Divergence

Swiss financial regulators have proposed new capital regulations for UBS, Switzerland's largest bank, aiming to strengthen its shock-absorbing capital buffers following recent banking crises, including the 2023 collapses of Silicon Valley Bank and First Republic. UBS broadly supports most of the Swiss Federal Council's regulatory proposals but strongly opposes the significant increase in capital requirements, which it describes as disproportionate, extreme, and not aligned with international standards. The proposed rules would require UBS to fully deduct investments in foreign subsidiaries, deferred tax assets, and capitalized software from its Common Equity Tier 1 (CET1) capital, potentially forcing the bank to hold an additional $24 billion to $42 billion in CET1 capital, raising its CET1 capital ratio substantially. UBS warns that these measures could put it at a competitive disadvantage relative to international peers and jeopardize its business model. The bank plans to engage with stakeholders to seek balanced solutions while maintaining its financial targets and capital return plans. Regulators emphasize the need to prevent a repeat of past banking failures, with UBS now considered "too big to fail" as Switzerland’s universal bank.