UBS Chief Blasts No Real Compromise as Swiss Capital Vote Nears
Published on 09/23/2026 at 03:40 | Editorial boerse-global.de
UBS boss Sergio Ermotti has rejected a proposal circulating in Bern that would require the bank to back its foreign subsidiaries with 90% hard core capital, calling it no genuine compromise but a lasting blow to the institution. His remarks, delivered at a Bank of America financial conference, came just hours before Switzerland's Council of States was due to vote on stricter capital rules drawn up in the wake of the emergency takeover of Credit Suisse.
Ermotti's pushback is the sharpest yet in a dispute that has widened into a fundamental argument over the future of the Swiss financial center. At the Finance Forum in Zurich, Finance Minister Karin Keller-Sutter framed the issue bluntly: it must be settled whether shareholders bear the losses in a crisis, or whether the general public is once again left on the hook. All systemically important institutions effectively enjoy an implicit state guarantee, she argued, which is why a failure would carry grave consequences for the entire economy.
A 45% Baseline and a $20 Billion Bill
At the heart of the clash is how foreign units should be capitalized. The government, backed by the Swiss National Bank, wants overseas subsidiaries fully covered by 100% hard core capital (CET1) at the parent level. The current ratio stands at 45%. Meeting the government's demand would force UBS to build roughly USD 20 billion in additional hard core capital.
The bank's leadership is digging in. In a position paper published Monday evening, UBS warned of drastic competitive disadvantages. Ermotti dismissed the 90% proposal under discussion in Bern as damaging to the institute, and pointed to the steep cost of pure core-capital backing. In an earlier media interview, he had described a compromise as tolerable if reserves were covered equally by hard core capital and contingent convertible AT1 bonds. Pure hard equity coverage, he warned, would call the viability of the business model into question.
UBS is instead championing a draft from the Council of States' economic committee, WAK-S, which would fully fund foreign subsidiaries while allowing at least 50% hard core capital and up to 50% AT1 bonds. Swiss business associations, including Economiesuisse, have thrown their weight behind the plan, fearing that overly strict requirements would raise financing costs across the wider economy.
Should investors sell immediately? Or is it worth buying UBS?
Government Concessions Come With a Catch
The government has offered UBS some relief on the treatment of software and deferred tax assets. According to the finance ministry, however, those concessions could be withdrawn if the rules are watered down too heavily during the legislative process.
Ermotti has defended his stance by stressing the management's responsibility to clients, shareholders and the families of the roughly 30,000 employees the bank has in Switzerland. He has also warned that the government's approach would leave UBS at a disadvantage in global competition.
Quarterly Momentum Builds, but Seasonality Bites
On the operating side, Ermotti offered a mixed picture. Wealth management and the transaction business are on track for a stronger third quarter than a year earlier. He tempered expectations, though, noting that seasonal effects are slowing momentum, meaning the improvement in the current quarter is likely to be smaller than the prior year's gain.
Dutch Tax Probe Closed for EUR 5 Million
Alongside the political fight, UBS cleared another legal legacy of the acquired Credit Suisse. The bank said it reached a settlement with the Dutch public prosecutor's office, paying EUR 5 million to end an investigation into alleged criminal responsibility over faulty tax returns filed by twelve Dutch clients between 2005 and 2015. The agreement contains no admission of guilt.
Investors Face a Long Wait
Regulatory uncertainty has weighed on the stock. UBS shares fell 3.5% during the session to close at EUR 42.97, after earlier slipping 1.7% to EUR 43.79 in European trading.
A drawn-out resolution now looks likely. The pivotal decisions on the rulebook are expected to stretch beyond the current year. The National Council will not take up the drafts before December at the earliest, and final adoption of the new rules is not seen as probable until 2027 — particularly since the process could end in a referendum and a subsequent popular vote. Should the 50/50 model UBS favors fail to win a majority in the Council of States, the bank faces a prolonged drag on its return on equity and less room for future share buybacks.
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