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

The Swiss government on Friday proposed strict new capital rules that would require banking giant UBS

to hold an additional $26 billion in core capital, following its 2023 takeover of stricken rival Credit Suisse.

The measures would also mean that UBS will need to fully capitalize its foreign units and potentially carry out fewer share buybacks.

“The rise in the going-concern requirement needs to be met with up to USD 26 billion of CET1 capital, to allow the AT1 bond holdings to be reduced by around USD 8 billion,” the government said in a Friday statement, referring to UBS’ holding of Additional Tier 1 (AT1) bonds.

The measures therefore amount to an additional $26 billion in core capital but a requirement of just $18 billion in new capital. This is $2 billion lower than the $20 billion estimated by JP Morgan earlier this week.