Pimco Backs Hybrid Capital Fix as UBS and Bern Spar Over Foreign Unit Buffers
Published on 09/18/2026 at 09:40 | Editorial boerse-global.de
A US bond giant has stepped into the Swiss capital fight, offering a middle path that could spare UBS from the full weight of Bern's proposed subsidiary rules. Pimco is pushing for a blend of hard core capital and AT1 bonds to cover the bank's foreign operations, provided common equity keeps the upper hand in the mix — a formula the investor argues would keep UBS aligned with international norms.
The intervention lands in the middle of a bitter dispute over how the lender should backstop its overseas subsidiaries. The Bundesrat wants those units funded entirely with hard core capital, a demand UBS calculates would leave it needing an extra $20 billion to $22 billion. That price tag has turned a technical regulatory question into one of the sharpest political clashes Bern has seen in years.
A Boardroom Warning and a Minister's Rebuke
UBS chairman Colm Kelleher has not been shy about the stakes. Speaking at the banking conference in St. Gallen, he insisted any new requirements must stay proportionate and internationally coordinated, with a Swiss compromise remaining the bank's overriding goal. He went further in earlier remarks, raising the prospect that the group could relocate its Swiss headquarters if the rules bite too hard.
Finance minister Karin Keller-Sutter answered with unusual force. She accused the bank of an aggressively fought lobbying campaign, citing direct pressure on parliamentarians and threats to withhold donations. The minister defended the government's push for tougher buffers by pointing to the bank's earnings power, arguing that a lender generating that kind of profit can absorb additional safety measures. She also framed the overhaul as a direct response to the collapse of Credit Suisse — and to the outsized risk the enlarged UBS now poses to Swiss public finances.
Should investors sell immediately? Or is it worth buying UBS?
Three Formulas, No Majority
Despite the urgency, the Ständerat adjourned without a decision on Tuesday. None of the three competing models mustered a workable majority, and the chamber pushed the vote on the banking law amendment to 23 September for lack of time.
The options on the table span a wide range. At one end sits the government's plan for full hard core capital coverage of foreign subsidiaries. In the middle is the economic committee's majority proposal, which would let AT1 bonds cover as much as half of the new requirements — a variant Reuters reported Kelleher regards as an acceptable compromise, and one estimated to cost UBS roughly $13 billion. At the other end, a minority led by SVP senator Stark wants a 90 percent core capital ratio, a step Stark says would save the bank 4 billion francs against the government's blueprint. A separate minority around Peter Hegglin has also pushed for the 90 percent threshold.
For the bank's leadership, the delay simply extends the waiting game. The final debate in the Nationalrat is scheduled for December.
Markets Shrug Off the Standoff
Investors have taken the political deadlock in stride. The stock added 0.4 percent on Tuesday to close at EUR 44.13, and in today's session it is changing hands at EUR 43.99, a modest 0.3 percent decline. The shares remain some distance below their 52-week high of EUR 48.19.
What happens next rests on the rescheduled vote, which will determine the financial framework the Swiss parliament imposes on the country's only remaining global bank.
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