UBS Faces $26 Billion Swiss Capital Demand: What's At Stake For The Bank And Switzerland

(MENAFN- The Rio Times) The Swiss government announced on June 6, 2025, that UBS must boost its core capital by up to $26 billion. This move follows UBS's 2023 takeover of Credit Suisse after its collapse.

Swiss authorities say the new rules will protect the country's economy and financial system. UBS, now with a balance sheet over $1 trillion, holds assets larger than Switzerland's annual economic output.

The government wants UBS to fully match the capital at its foreign subsidiaries, raising the requirement from 60% to 100%. This step alone could force UBS to add $23 billion to its Swiss-based reserves.

UBS's Common Equity Tier 1 (CET1) ratio could rise from 14.3% to as high as 17%. This level is well above global competitors like JPMorgan, Goldman Sachs, and Deutsche Bank, which operate with CET1 ratios between 11% and 15.8%.

The new rules also let UBS reduce its Additional Tier 1 (AT1) bond holdings by $8 billion, but this does not offset the full impact. Swiss regulators argue these measures will make UBS more resilient in a crisis and reduce the risk of taxpayer-funded bailouts.



The Swiss National Bank supports the plan, saying it will strengthen the bank's stability. However, UBS's management warns that the higher capital requirements will raise costs, reduce flexibility, and hurt competitiveness.
UBS Warns of Strategic Shift Amid Stricter Swiss Capital Rules
Analysts estimate the change could lower UBS's return on equity by 1–2 percentage points, making growth and foreign expansion more expensive. UBS has pushed back, saying it may need to rethink its business model.

Some analysts believe the bank could consider selling parts of its international business or, in a more drastic scenario, move its headquarters abroad. UBS has not confirmed any such plans, but the possibility remains if the rules make Swiss operations less attractive.

The government proposes a transition period of six to eight years for UBS to meet the new requirements. Lawmakers may revise the rules before they take effect, likely not before 2028.

The debate highlights a core tension: how to keep Switzerland 's financial system safe without driving away its largest bank. For Switzerland, losing UBS or forcing it to shrink would mean less tax revenue, fewer jobs, and a weaker position as a global financial hub.

For UBS, the rules present a tough choice between safety and competitiveness. All figures and claims are based on official statements and public financial data.

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