UBS shares fall as CEO pushes back on Swiss capital rules ahead of vote

 UBS Group shares fell more than 3% Tuesday after Chief Executive Sergio Ermotti said that a proposal requiring the bank to back its foreign units with 90% Common Equity Tier 1 capital, rather than the government’s proposed 100%, does not amount to a genuine compromise, urging Switzerland to pursue a more moderate approach.

The upper house of the Swiss parliament is due to vote Wednesday on new capital rules drafted for UBS following Credit Suisse’s 2023 collapse. 

The bank published a position paper laying out its case as the regulatory debate intensifies, arguing that the discussion has been marked by differing interpretations and incomplete representations of key issues. UBS said it supports regulatory adjustments that are targeted, proportionate, internationally aligned and address the root causes of the Credit Suisse crisis, but argued a 90% CET1 requirement "would significantly damage UBS’s competitiveness."

The paper also defended Additional Tier 1 bonds as an established part of the regulatory toolkit in Switzerland and internationally, arguing they can be converted into CET1 capital instantly during a crisis, making them an effective early-intervention mechanism.

UBS backed an alternative proposal from the Council of States’ economic committee, known as WAK-S, that would strengthen AT1 instruments under a 50/50 model, saying it protects taxpayers as effectively as the government’s plan while triggering stabilizing measures earlier and more cost-efficiently. The bank said that model, without a regulatory filter that delayed action, would have exposed Credit Suisse’s problems as early as 2021, forcing measures such as dividend suspensions and bonus cuts.

UBS further argued that stricter capital rules would carry broader costs for the Swiss economy, noting that its foreign subsidiaries, including those in the U.S., support diversified activities that also serve Swiss economic interests. The bank said its scale reflects the strength of the Swiss economy and is already accounted for through additional regulatory requirements layered on top of standard rules.