Switzerland’s Council of States approved a draft requiring systemically important banks to back 90% of foreign-subsidiary holdings with Common Equity Tier 1 (CET1) capital while UBS warned the proposal could harm its competitiveness.
The Council of States, Parliament’s upper chamber, rejected the Federal Council’s proposed 100% requirement by 23-22 before backing the 90% option 29-16. The revised bill passed 33-10, with two abstentions. It sets how a Swiss parent bank’s investments in overseas subsidiaries count toward capital requirements.
UBS estimated that the 90% proposal would add about USD 16 billion to UBS AG’s CET1 capital requirement. The bank said that would be in addition to about USD 2 billion from ordinance-level measures announced earlier in 2026 and around USD 15 billion required under existing rules following its Credit Suisse acquisition. UBS estimated that, if the 90% proposal is confirmed, it would have to hold about USD 33 billion in incremental CET1 capital since the Credit Suisse acquisition; it put the total annual cost resulting from the acquisition at about USD 2.5 billion once the measures take effect. The bank called the proposed tightening excessive and said it would weaken competitiveness.
The Federal Council proposed full backing after the 2023 Credit Suisse crisis. It said losses at foreign subsidiaries could weaken the Swiss parent’s capital ratios, and argued stronger requirements would reduce the risk of a resolution or state intervention. The government said its approach would shift more of that risk to shareholders rather than taxpayers.
In a Sept. 30 letter, Artisan Partners urged UBS’s board to move the bank out of Switzerland. The firm said its managed accounts had a combined position of more than 60 million UBS shares when it sent the letter.
Swiss law allows a referendum request within 100 days of a law’s official publication if at least 50,000 eligible voters or eight cantons support one.
Reuters reported, citing unnamed sources, that UBS was preparing contingency options that could include moving its headquarters or merging with another lender. UBS has not publicly confirmed those scenarios. Reuters also reported that a National Council committee is due to start reviewing the proposal on Oct. 26, with a full lower-house debate expected in December at the earliest.
