Swiss lawmakers are evaluating a revised legislative approach that would ease the capital requirements applied to UBS Group, potentially reducing the bank's financial burden by billions of dollars. The draft under discussion seeks to adjust how much Common Equity Tier 1 (CET1) capital UBS would need to allocate to support its foreign subsidiaries.
Under a more stringent version of the government's framework, UBS would have been required to fully back its international units with 100% CET1 capital. The revised drafting under consideration would lower that obligation, asking UBS instead to allocate roughly 70% to 80% of CET1 capital in support of those units.
Officials and bank representatives debated multiple configurations during an extended hearing in Bern last month. One previously discussed compromise would have mandated at least 50% CET1 backing for foreign units. Government ministers and UBS executives both took part in that parliamentary session to present and scrutinize the competing approaches.
UBS has publicly described the government's initially proposed regulatory framework as "extreme." The bank is now Switzerland's only remaining global lender after it acquired Credit Suisse following the latter's collapse in 2023.
The revised draft would therefore represent a material relaxation compared with full CET1 backing, while still keeping a substantial portion of capital ring-fenced for overseas operations. Lawmakers continue to weigh the trade-offs between stronger capital buffers for cross-border exposures and the credit and operational demands placed on a single dominant institution.
Details about the final form of the legislation remain under discussion. The text being considered would change the proportion of CET1 capital required to back foreign subsidiaries from the full-coverage stance in the government's earlier plan to the lower band of about 70% to 80%, when compared with the alternative compromise that had proposed a 50% minimum.
Contextual note: The legislative debate and the range of CET1 backing percentages were discussed during parliamentary hearings in Bern that included appearances by government officials and UBS executives.