90% Capital Proposal Prompts UBS Chief to Warn of Eroding Competitiveness from Switzerland
Key Facts
UBS Chief Executive Sergio Ermotti said the bank is assessing the long-term consequences of Swiss capital rules for its ability to compete from the country, warning of the proposal's impact on its position without announcing a decision to leave. Bloomberg, via Swissinfo, quoted him as saying that clients “value Switzerland as much as we do, but the passport alone is no longer enough today.” The dispute centers on a proposal requiring systemically important institutions to back their foreign subsidiaries with CET1 capital equal to 90%. The Swiss Council of States approved the proposal on September 23 and referred it to the National Council to continue the legislative process. Ermotti’s remarks come as the bank assesses the impact of requirements that could increase the capital it holds and its costs.
The Council of States voted for the 90% ratio by 29 votes to 16 for an alternative backed by Ermotti that would allow capital coverage through a mix of 50% CET1 and 50% AT1. The approved proposal means foreign subsidiaries would be covered with CET1 capital at the specified ratio, instead of the mix that failed to win a majority. UBS said the council’s decision would result in an excessive further tightening of capital requirements, which it described as “among the toughest globally.” The bank added that it would continue to engage in the parliamentary process in pursuit of a solution that balances financial stability and competitiveness. The bill remains before the National Council, leaving its final details subject to completion of the legislative process.
According to an estimate cited by S&P Global Market Intelligence, UBS could need an additional $16 billion in CET1 capital on top of the roughly $2 billion it is currently required to hold if the proposal is implemented. The group estimated that the cost of holding the additional capital would be about $2.5 billion a year. The bank said its participation in the legislative process was aimed at reaching a solution that “supports the country’s financial stability without imposing unjustified costs on UBS shareholders, clients and employees.” The bank’s position links the amount of capital required and the cost stakeholders could bear with preserving its ability to compete over the long term. On a call with analysts, Ermotti said the September vote had harmed the bank’s hopes of easing its capital increase plan, but noted that “there is no need to make decisions in a hurry” about leaving Switzerland.
The regulatory confrontation comes as UBS reported net profit of $2.7 billion in the third quarter of 2026 and a CET1 ratio of 14.7% at quarter-end. Global Wealth Management recorded $55.1 billion in net new assets over the same period. The quarterly performance offers a picture of the bank’s earnings and client flows alongside the debate over how much capital it may be required to allocate to its foreign subsidiaries. UBS also said it expects to complete a $3 billion share buyback program by the time it reports fourth-quarter results. The bank set February 3, 2027, as the date for publishing those results.
In the stock market, UBS shares closed at $46.79 on October 27, compared with a close of $46.46 on October 26. These are the available closing prices for the two days, with no further details on the share’s movement during the October 27 session. The next legislative step is in Switzerland’s National Council, after the Council of States referred the capital proposal to it. In parallel, UBS said it would continue to participate in the parliamentary process to reach a settlement that takes financial stability into account and does not impose costs it considers unjustified. The company’s next announced date for investors is the publication of fourth-quarter results on February 3, 2027.