The Swiss government has dropped a regulatory bomb on UBS, proposing tough new capital requirements in a move meant to safeguard the country’s financial system. UBS, still digesting its 2023 takeover of Credit Suisse, now faces the possibility of needing to raise up to $26 billion in core capital to comply with rules far stricter than those of most international peers.
One of the most controversial changes would force UBS to fully capitalize all its foreign subsidiaries, a sharp increase from the current 60% requirement. The Swiss financial watchdog, FINMA, would also gain sharper teeth, with the ability to issue fines and impose stricter oversight measures including the right to enforce detailed recovery plans in case of trouble.
Another major proposal involves executive accountability. The Swiss authorities want a formal system that pins responsibility for failures directly on senior managers. That means naming names, assigning duties, and—if needed—clawing back bonuses. UBS, unsurprisingly, is not thrilled, calling the measures excessive and potentially damaging to its international competitiveness.
Even with UBS crying foul, the market didn’t panic. Investors seemed prepared for impact, with UBS shares rising 5% after the news. Still, if these proposals pass, they won’t take full effect before 2028, and UBS would have up to eight years to adapt. But the signal is loud and clear: Switzerland intends to avoid another Credit Suisse-style fiasco, even if it comes at a steep cost.
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