Swiss Central Bank Backs Stricter Capital Requirements for UBS

The Swiss National Bank has intervened in the dispute over stricter capital requirements for UBS, Switzerland's largest lender. The bank must hold about €17.2 billion ($20 billion) of additional equity under the proposed reforms.

UBS has described the plan as excessive and warned that it would place the bank at a disadvantage to its global rivals, making Switzerland less attractive as a financial centre. It also argued that tying up more capital would constrain its capacity to invest and lend.

The dispute began with the rescue of Credit Suisse in 2023, which was absorbed by UBS in a state-brokered transaction after a crisis of confidence produced deposit withdrawals and left the authorities facing the prospect of a disorderly failure. The merger created a structural problem, as Switzerland now hosts a single dominant global bank whose balance sheet is very large beside national output.

The Swiss National Bank's vice-chair, Antoine Martin, said that capital must be available where losses occur, rather than depending on resources that may prove difficult to move between legal entities during a crisis. He emphasized the role of collateral and liquidity, stating that a bank can meet accounting capital requirements and still fail if it cannot obtain cash quickly enough against assets accepted by the central bank.