UBS pushes back on Swiss capital overhaul

UBS Group has launched a forceful objection to proposed changes to Swiss capital rules that would significantly increase Common Equity Tier 1 (CET1) coverage for its foreign subsidiaries. In a position paper issued on September 22, 2026, the bank argued against both a 90% CET1 requirement and a government draft envisaging a 100% threshold. UBS contends these options go too far and is instead calling for adjustments to the framework that it describes as targeted, proportionate and aligned with international standards.

The bank’s intervention comes as Switzerland reviews how much capital large institutions must hold in their foreign entities following recent reforms of the financial stability regime. UBS framed the debate as critical for the long term, warning that the chosen approach will shape the country’s financial centre for decades. The position paper sets out the bank’s case that more extreme CET1 ratios on foreign units are not necessary to safeguard stability and could, in its view, carry unintended consequences.

A central argument in UBS’s paper is that sharply higher CET1 demands on foreign subsidiaries would weaken the group’s competitive position. The bank maintains that its international units underpin diversified activities and services that also benefit Swiss clients and the domestic economy. It warns that imposing very high CET1 thresholds on these operations would increase costs and constrain its ability to compete globally.

UBS further cautions that the broader Swiss economy could be affected if capital rules become markedly stricter than in other major financial centres. The bank links higher capital lock-ups in foreign units to potential knock-on effects for growth, investment and the attractiveness of Switzerland as a financial hub. While supporting the objective of stronger resilience, it argues that this should be achieved without undermining the country’s international standing.

Rather than the 90% or 100% CET1 approaches under discussion, UBS has endorsed an alternative proposal developed by the Council of States’ economic committee. This "50/50" model would strengthen Additional Tier 1 (AT1) instruments alongside CET1, adjusting the mix of loss-absorbing capital rather than concentrating requirements solely on common equity. The bank argues that such a structure would still enhance systemic safety while avoiding what it sees as excessive demands on CET1.

According to UBS, the 50/50 concept would maintain strong protection for taxpayers by ensuring sufficient buffers that can be written down or converted in a stress scenario. The bank also claims the framework would trigger stabilising measures earlier and more cost-efficiently than the proposed CET1-heavy options. This positioning places UBS in alignment with the economic committee’s line as lawmakers weigh how to recalibrate the capital regime.

Financial markets responded negatively to the intensifying capital debate and UBS’s public stance. On September 22, 2026, UBS shares fell by more than 3% after Chief Executive Sergio Ermotti criticised the envisaged 90% CET1 requirement and the bank released its detailed critique. The drop reflected investor concern over the potential earnings and valuation impact if very high capital thresholds are ultimately adopted.

The political process now moves to a decisive stage. The Council of States, Switzerland’s upper house, was scheduled to resume deliberations and hold a vote on the capital framework on the Wednesday following the publication of UBS’s paper. Finance Minister Karin Keller-Sutter was expected to address the chamber as lawmakers consider whether to back the stricter CET1 proposals or move toward the 50/50 model favoured by UBS and the economic committee.