Swiss lawmakers seek to fast-track UBS capital decision as debate begins

Up for debate ‌are the government's proposal to make UBS fully back its foreign units with Common Equity Tier 1 (CET1) capital, and a compromise pitch by lawmakers that could let it partly use less expensive Additional Tier 1 (AT1) capital instead.

The concession aims to boost UBS's competitiveness, but the government and academics say AT1 capital's loss-absorbing capacity is too limited.

Urged on by Finance Minister Karin Keller-Sutter, ⁠Switzerland is tightening regulations after the collapse of Credit Suisse in 2023 left UBS as the country's sole big global bank.

UBS - which has criticised the regulatory plans as "extreme" - said last week its share buyback plans for 2026 depend on getting more clarity on the banking rules, which could mean it must find around $20 billion in additional core capital.

A speedy ruling by the influential Economic Affairs and Taxation Committee on UBS's key capital requirements could move the item to parliament's upper house in June, followed by a final decision in the lower house by autumn at the earliest.

Parliamentary chambers divided on UBS 

The upper house committee that will first debate the banking bill is widely seen as sympathetic to UBS's argument that costly regulation will hurt its business and the economy.

But the bank could face a tougher reception in the lower house committee and on the floor of parliament. Which side prevails will largely depend ⁠on lawmakers of centrist parties and moderates needed to build majorities.

The leftist Social Democrats and Greens, which back the government's tougher stance on UBS, together hold 11 of the upper house's 46 seats, and 64 of ⁠the 200 lower house seats.

The right-wing Swiss People's Party (SVP) and the business-friendly Liberals (FDP), which are expected to broadly back softer rules, together hold 19 upper and 94 lower house seats.

While some Centre ⁠Party and Green-Liberal lawmakers have voiced support for UBS's position, it is unclear how united the parties are, and how many in the FDP will defy their party colleague Keller-Sutter over her plan for tougher rules.