Swiss Government Proposes $26B Capital Boost for UBS Post-Credit Suisse

The Swiss government has proposed stringent new capital regulations requiring UBS to increase its core capital by up to $26 billion following its 2023 acquisition of Credit Suisse, including fully capitalizing its foreign subsidiaries and reducing share buybacks. These measures aim to raise UBS's Common Equity Tier 1 (CET1) capital ratio from 14.3% to around 17%, surpassing global peers, thereby enhancing the bank's resilience and reducing the likelihood of government bailouts. The Swiss National Bank supports the proposals, emphasizing their role in strengthening UBS's ability to withstand financial distress and maintain stability independently during crises. While UBS shares rose following the announcement, UBS executives have expressed concerns that increased capital demands may disadvantage the bank relative to global competitors and affect Switzerland's financial hub status. The new regulations, expected to be legislated by 2028, may constrain UBS's share buyback plans but the bank remains committed to rewarding shareholders through dividends and repurchases by 2025. These regulatory changes reflect a broader effort by Swiss authorities to restore financial stability and trust in the banking sector after the Credit Suisse collapse.