UBS faces billion-dollar surcharge – Bern plans significantly stricter capital requirements for systemically important banks

6/7/2025, 1:12 PM

Bern intends to force UBS to significantly higher capital buffers—against the bank's resistance and for years to come.

Eulerpool News Jun 7, 2025, 1:12 PM

The Swiss government wants to increase the capital requirements for UBS by up to $26 billion – a direct response to the takeover of the struggling Credit Suisse last year. The aim of the Federal Department of Finance (FDF) is to drastically reduce the risk of renewed government intervention in the banking sector. UBS described the plans as "extreme" and "not coordinated internationally.

The core of the reform is the obligation to fully back all foreign subsidiaries of UBS with 100 percent equity capital from the parent company in the future. Currently, this requirement is at 60 percent. To meet the new guidelines, the major bank would have to increase its so-called Common Equity Tier 1 (CET1) capital by around 26 billion US dollars. After deducting 8 billion dollars in AT1 requirements that would be eliminated, a net increase of 18 billion dollars in "going concern" capital would remain.

UBS, which had taken over the faltering Credit Suisse in 2023 with state mediation, sharply criticizes the plans: The measure is excessive, disproportionate, and ignores international standards. The finance department, on the other hand, points to structural weaknesses in the old regime. In retrospect, the capital resources of the Credit Suisse parent company were inadequate. A parliamentary report particularly assessed the capital reliefs from 2017 as "incomprehensible.

The reform proposals, part of a new "Too big to fail" package, are to be put out for consultation in the fall and come into force no earlier than early 2028. UBS would then be granted a transition period of at least six to eight years to implement the requirements.

The initiative is likely to have a signaling effect beyond Switzerland.

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