The Swiss National Bank has endorsed a parliamentary proposal to increase capital reserve requirements for UBS. The Council of States voted 29 to 16 on September 23 to mandate a 90% Common Equity Tier 1 capital backing for the bank's foreign subsidiaries. This measure follows the 2023 collapse of Credit Suisse and its subsequent merger into UBS.
The initial government proposal sought a 100% requirement, which would have necessitated an additional $20 billion in capital. The negotiated 90% threshold is expected to cost UBS between $16 billion and $18 billion. SNB Vice Chairman Antoine Martin described the 90% level as a sufficient amount of capital, though he noted 100% would have been ideal.
UBS currently controls approximately 25% of the Swiss domestic deposit and loan market. The bank has publicly opposed the new requirements, asserting that the Credit Suisse crisis stemmed from governance and risk management failures rather than capital ratios. UBS intends to lobby against the bill as it moves to the lower house of parliament.
The legislation includes a seven-year transition period for compliance, allowing the bank to adjust its capital base gradually. A final decision on the bill is not anticipated before late 2026 or early 2027. The process may also involve a public referendum, as permitted under the Swiss political system.
