Swiss Committee Fails to Agree on UBS Capital Rules

A Swiss parliamentary committee failed to reach an agreement on Tuesday, August 11, regarding proposed banking regulations for UBS Group AG. The draft bill, developed by the Swiss government following the collapse of Credit Suisse, would require the bank to hold approximately US$20 billion in additional Common Equity Tier-1 (CET1) capital to protect taxpayers and prevent future banking crises.

The proposal specifically seeks to increase the capitalization of foreign subsidiaries from 60 percent to 100 percent using CET1 capital alone. UBS Group AG argues that these requirements are excessive and would damage the competitiveness of the bank and the broader Swiss banking sector.

Some lawmakers in the upper house's economic affairs and taxation committee have proposed amendments to soften the rules. These suggestions include allowing the use of cheaper Additional Tier 1 (AT1) capital or introducing higher regulatory trigger points for AT1 instruments. The committee is scheduled to reconvene on August 31, with the goal of bringing the bill to an upper-house vote in September.