A sign in German with “Part of the UBS group” in Basel on May 5, 2025.
Fabrice Coffrini | AFP | Getty pictures
The Swiss government proposed strict new capital rules on Friday that Bankriese would require UBS After taking over the deleted competition -Credit Suisse in 2023, a further 26 billion US dollar hold on core capital.
The measures would also mean Perform fewer stock returns.
“The increase in requirements to the group must be met up to $ 26 billion CET1 capital so that the AT1 bond stocks are reduced by around $ 8 billion,” said the government in a statement on Friday and referred to UBS 'holding via additional animal 1 bonds (AT1).
The measures therefore amount to additional capital of $ 26 billion, but a new capital of only $ 18 billion. These are 2 billion US dollars lower than the 20 billion US dollars estimated by JP Morgan at the beginning of this week.
After the announcement, the UBS shares rose by 6% and ended the trading session on Friday by 3.8% higher.
Swiss bank becomes more stable and attractive in areas such as wealth management, said Swiss finance minister Karin Keller-Sutter during a press conference on Friday. “I don't think competitiveness is affected, but it is true that growth abroad becomes more expensive,” she said in comments from Reuters.
UBS said, while it supports it “in principle”, most of the regulatory proposals announced on Friday do not agree to the “extreme” increase in capital requirements. Based on the results of the bank's first quarter, the CET1 capital ratings of 12.5% ​​and 13% together with previously communicated capital-companies are to keep an additional CET1 capital of around $ 42 billion.
The bank made its goal to achieve an underlying return of the CET1 capital of around 15%, and also confirmed the intentions of the capital return for the year.
“UBS will actively participate in the consultation process with all relevant stakeholders and contribute to the evaluation of alternatives and effective solutions that lead to proposals for regulatory changes with an appropriate cost/performance result. UBS will also rate suitable measures if and, if possible, the negative effects that the extreme regulations have on its shareholders,” said the bank.
Johann Scholtz, Senior Equity Analyst at Morningstar, noticed that the news was “as bad as for UBS”.
The bankruptcy giant “can now work for some concessions and take some measures themselves to reduce the effects, for example upstream upstream, an excess capital of its subsidiaries,” said Scholtz. He added that the negotiations begin immediately, but a long phase for the use of the measures will be available for UBS, the earliest that is fully valid than 2034.
JPMorgan analysts under the direction of Kian Abouhose also emphasized that a long lead time of six to eight years for UBS to meet investments in its foreign units is a “positive” result for the bank. With the final time around 2027, JPMorgan expects the complete implementation until 2033 at the earliest.
UBS is expected to generate around 12 billion US dollars [per annum] In profits with a dividend of around 3 billion US dollars, which means that the bank can meet “its capitals” by 2033+ and is still continued with return purchases, “said the analysts.
The Swiss National Bank said it supported the government's measures because it “significantly strengthens” the resilience of the UBS.
“This measure not only reduces the likelihood of a large systemically important bank such as UBS, but also increases the space of a bank for the maneuver to stabilize itself in a crisis through its own efforts in a crisis. This is less likely that UBS must be saved by the government in a crisis,” said SNB in ​​a Friday declaration.
“Too big to fail”
UBS has been fighting for years of strategic mistakes, mismanagement and scandals at the Credit Suisse against the country's second largest bank for a more spye capital rules since he has recorded the country's second largest bank at a reduction price.
The shock of the banking giant also brought the Swiss financial regulatory authority Finma for its perceived brief supervision of the bank and the final time of its intervention.
The Swiss supervisory authorities argue that UBS must have a stronger investment requirement to protect the economy and the financial system, since the bank's credit was exceeded in 2023 worth 1.7 trillion dollars in 2023. UBS insists that it is not “too big to fail”, and that the additional investment requirements – which are supposed to withdraw their bar liquidity – will affect the bank's competitiveness.
At the center of the patient situation, there are concerns about UBS's ability to buff the prospective losses in its foreign units, where it has so far had the obligation to support 60% of capital with capital.
Higher investment requirements can reduce the balance and loan offer of a bank by strengthening the financing costs of a lender and subjecting their willingness to credit and allowing their appetite to risk. For the shareholders, it is determined that the potential effects on the discretion available for the distribution, including dividends, stock buyback and bonus payments, are available.
“While the handling of Credit Suisses Legacy company should release capital and reduce the costs for UBS, a large part of these profits from stricter regulatory requirements could be absorbed,” said Johann Scholtz, Senior Equity Analyst at Morningstar, in a note before FINMA's announcement.
“Such measures can be significantly higher than those of competitors in the United States, put pressure on the returns and reduce the prospects for the restriction of its long-term evaluation gap. The long-standing premium rating compared to the European banking sector has also recently disappeared.”
The prospect of strict Swiss capital rules and the extensive US presence of UBS through its core department Global Wealth Management, since the trade tariffs of the White House are already burdening the bank's assets. In a dramatic turn, the bank lost its crown as the most valuable lender of Continental Europe through market capitalization of the Spanish giant Santander in mid -April.
– Ganesh Rao from CNBC contributed to this report.