UBS Shareholders Endorse Dividend as Capital Clash with Bern Intensifies

The annual meeting of UBS Group AG in Basel this week presented a study in contrasts. While shareholders delivered near-unanimous support for management proposals, including a dividend hike, the bank’s leadership issued a stark warning to Swiss authorities over looming capital rules that could jeopardize future returns to investors.

Administrative Board Chairman Colm Kelleher used the platform to directly link the bank’s share buyback program to the outcome of a heated regulatory dispute. “It is our duty to carefully examine suitable options to limit the negative consequences as far as possible,” Kelleher stated, describing government proposals as “extreme.” He explicitly ruled out any strategic retreat from international business or a downsizing of the bank.

The core of the conflict is a federal plan that would force UBS to fully capitalize its foreign subsidiaries. Analysts estimate this requirement would demand an additional $22 billion in Common Equity Tier 1 (CET1) capital, pushing the group’s CET1 ratio to approximately 18.5%. A separate rule concerning the treatment of intangible assets could require a further $3 billion for the Swiss unit alone. Kelleher argued these measures would do little to enhance financial stability while seriously endangering the bank’s business model.

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Shareholders, however, signaled strong backing for the current course. They approved a rise in the dividend to $1.10 per share with nearly 100% support. In board elections, nine members were re-elected and three new ones joined: Markus Ronner, Luca Maestri, and Agustín Carstens, replacing Lukas Gähwiler, William Dudley, and Jeanette Wong. Ronner will assume the vice-chairmanship from Gähwiler, who is retiring after 45 years in the industry. Kelleher himself received the lowest approval rating of all candidates at 88%, while other board members secured votes well above 90%.

The bank also received backing from an unexpected quarter. Natalia Ferrara, Vice President of the Swiss Bank Employees Association, held the Federal Council and financial regulator FINMA partly responsible for the collapse of Credit Suisse, citing excessive exceptions instead of consistent supervision. She warned Switzerland could not afford to lose its last major bank.

Attention now shifts to two critical dates that will define the coming weeks. On April 22, the Swiss Federal Council will vote on the draft legislation for the new capital rules. Analysts at Bank of America note that if the government allows the recognition of certain deferred tax assets, the capital burden for intangible assets could fall from nearly $11 billion to around $6 billion. Market observers, however, expect Bern to hold firm on the strict capitalization requirement for foreign units.

Just one week later, on April 29, UBS will release its official first-quarter results for 2026. This report will be scrutinized for signs of whether the integration of Credit Suisse is supporting the targeted return on equity of 15% and if regulatory headwinds are already impacting financial performance. The outcome of the political debate will set the tone for whether UBS can maintain its current capital return policy or if shareholders must brace for a prolonged period of heightened capital retention.

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