Swiss Industry Lobby Backs 50% Compromise as UBS Awaits Ständerat Verdict
Published on 09/21/2026 at 20:40 | Editorial boerse-global.de
Ahead of a decisive vote in Switzerland's Council of States, the country's leading business federations have thrown their weight behind a middle-ground proposal for how UBS should capitalise its foreign subsidiaries. In a joint appeal to lawmakers, groups including economiesuisse, the Swiss Trade Association, Swissmem, SwissHoldings and Scienceindustries warned that excessive tightening of capital requirements would erode the bank's competitiveness — and, by extension, drive up financing costs and restrict lending to industry and mid-sized companies.
The Council of States is due to debate the revision of the Banking Act on Wednesday, a legislative response to the collapse of Credit Suisse in March 2023. At the heart of the dispute is how much hard core capital (CET1) must back overseas group units. The Federal Council under Finance Minister Karin Keller-Sutter wants those holdings covered at 100 percent. Government estimates put the resulting capital requirement for UBS at roughly USD 20 billion, with the bank itself calculating annual additional costs of about USD 3 billion. A minority motion in parliament proposes a 90 percent ratio.
Business Groups Reject Both Maximalist Options
Both of those variants face opposition from the industry associations, which have lined up behind a proposal from the Council of States' Economic Affairs Committee (WAK-S). Under that plan, foreign holdings could be backed by at least 50 percent hard core capital, with up to 50 percent covered through AT1 capital instruments. The federations argue that rules set at 90 or 100 percent would go far beyond the standards applied in international financial centres such as the United States, the United Kingdom or Singapore.
UBS's own leadership has signalled it can live with that middle path. CEO Sergio Ermotti and Chairman Colm Kelleher have described the WAK-S option as painful but manageable. According to Ermotti, the compromise would require building around USD 13 billion in additional Tier-1 capital, translating into roughly USD 2 billion in extra annual costs during the phase-in period. Demands for 90 or 100 percent hard core capital, he said, are excessive.
The CEO also pointed out that UBS investors have already committed some USD 15 billion to recapitalisation and restructuring in the course of the Credit Suisse takeover. A return on equity at pre-merger levels is not expected until the end of 2026. Ermotti dismissed speculation about personal consequences, saying resignation was not an option for him.
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Kelleher Ties Concession to a Warning on Swiss Future
Kelleher has likewise called the parliamentary committee's proposal a viable compromise, since it would allow the bank to count AT1 bonds partially toward its equity requirements. He attached a clear caveat, however: should the final rules weaken the bank's international position, UBS would have to reconsider its future in Switzerland.
The political process has already stretched into extra time, and investors greeted the breathing room with cautious optimism. The stock added 0.9 percent to EUR 44.45 on European exchanges. The delay stems from continued wrangling over how far the new requirements should reach, with the bank's management using the remaining window to warn against excessive burdens. Ermotti, citing Reuters, cautioned that overly strict regulation could jeopardise the institution's competitiveness in its home market.
There was movement in parliament on Thursday as well. Lawmaker Andrea Caroni withdrew his initiative to send the banking law back to the Federal Council for a complete overhaul, after a group of parliamentarians had tried on Wednesday to refer the legislative deliberations back to the government.
RBC Sees Up to 10 Percent Hit to Earnings Per Share
Analysts see tangible risks to future profitability in the political tug-of-war. Anke Reingen of RBC noted that the number of conceivable scenarios for the capitalisation of foreign subsidiaries has recently increased. By the bank's calculations, stricter equity rules could weigh on UBS earnings per share by as much as 10 percent. Even so, Reingen kept her "Outperform" rating with a price target of CHF 44.
In the market, the shares rose 1.8 percent on the day to EUR 44.82. Even with those gains, the stock trades 7.8 percent below its 52-week high of EUR 48.19, leaving the uncertainty over the regulatory burden visible in the valuation.
Earnings Strength Cushions Political Risk
Despite the political debates, the institution is operating from a position of financial strength. Net income for the full first half of 2026 totalled USD 5.8 billion, while assets under management reached USD 7.3 trillion at mid-year. At the same time, the group is pressing ahead with an overhaul of its liabilities, affecting nine different bond series, and is parting with unprofitable activities.
All eyes now turn to Bern, where the Council of States' decision will determine how tightly the financial corset is drawn around Switzerland's largest bank.
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