Swiss Order Raises UBS Capital Needs by $20 Billion with Concessions
Swiss government’s executive order will increase UBS’s capital requirements by around $20 billion from next year, including a $19 billion rise to back foreign units fully at the parent bank. Concessions allow UBS to count deferred tax assets and phase out software writedowns over three years starting 2029.
1. Executive Order Details
The Swiss government’s executive order, set to take effect next year, will boost UBS Group AG’s regulatory capital requirements by approximately $20 billion to strengthen banking resilience.
2. Concessions Offered
To ease the burden, UBS may continue counting deferred tax assets toward its regulatory capital and spread software writedowns over a three-year period beginning in 2029.
3. Foreign Unit Capital Backing
Proposed legislation requires UBS to back its foreign subsidiaries with 100% capital at the parent bank, accounting for an estimated $19 billion of the total increase.
4. Potential Impact
While higher buffers aim to prevent crisis contagion similar to Credit Suisse’s collapse, the added capital demands could weigh on UBS’s return on equity and global competitiveness.