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UBS Set to Bear $20bn In Capital Burden
April 23, 2026
The Swiss government has released draft legislation proposing tighter regulation of UBS. It requires the bank to back its foreign subsidiaries with 100% of CET1 capital, up from the current 60%. This could lead to ~$20bn in additional capital requirements for UBS. The bank would have a seven-year transition period to comply, provided parliamentary deliberations proceed without delay. Separately, amendments related to capital backing for balance sheet items like software will take effect on 1 January 2027, with software and deferred tax assets exempt from full capital backing requirements. The government has also opted to hold off on changes to AT1 capital instruments pending broader international developments.
UBS has pushed back strongly, calling the proposals “extreme” and out of step with international norms, and warned of far-reaching consequences for the Swiss economy. Despite the bank’s opposition, the Federal Council, Swiss National Bank, and regulator Finma agree that the measures are necessary and manageable. The government also pushed back on UBS’s competitiveness concerns, arguing that stronger capital buffers support long-term stability over short-term returns. The reforms still face a lengthy parliamentary process expected to run at least into next year. A key committee debate is scheduled for May 4 and the bank is set to report 1Q2026 earnings on April 29.
UBS’s bonds traded with a negative bias. It’s 6.6% Perp was stable at 100.9, yielding 6.34%.
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