Swiss government proposes tough new capital rules in major blow to UBS

In a significant regulatory move, the Swiss government has proposed stringent capital requirements for UBS, aiming to fortify the nation’s financial system following the 2023 Credit Suisse crisis. Announced on June 6, 2025, the measures would compel UBS to bolster its capital reserves by up to $26 billion, elevating its Common Equity Tier 1 (CET1) ratio from 14.3% to approximately 17%, surpassing global peers like JPMorgan and Goldman Sachs.

A central aspect of the proposal mandates UBS to fully capitalize its foreign subsidiaries, a shift from the current 60% requirement. This change aims to mitigate risks associated with the bank’s international operations, ensuring greater financial stability.

UBS has expressed concerns over the proposed rules, arguing they could hinder its global competitiveness and shareholder returns. The bank warns that increased capital requirements may impact its ability to conduct share buybacks and could necessitate a reevaluation of its international strategy.

Despite UBS’s reservations, the Swiss government emphasizes the necessity of these reforms to prevent future financial crises and protect taxpayer interests. The proposed regulations are part of a broader initiative to enhance the authority of financial regulator FINMA, including granting it enforcement powers and greater control over banker compensation.

The government plans to initiate consultations with stakeholders in late 2025, with full implementation expected no earlier than 2028. UBS would be granted a six-to-eight-year transition period to comply with the new requirements.