Swiss Upper House Backs UBS Capital Plan, Approves 90% CET1 Proposal

UBS's domestic unit will need to hold equity capital worth at least 90% of its subsidiaries' value abroad under a new proposal approved by Switzerland's upper house. The measure, which would require an additional $16 billion in equity, is seen as a moderate shift from the government's original call for 100% CET1 backing.

Finance Minister Karin Keller-Sutter argued that the 90% plan ensures UBS can sell businesses abroad without draining capital at home. The bank has expressed concerns about the proposal, stating it 'fails to address the root causes of the Credit Suisse collapse' and will focus on protecting its long-term interests.

The Swiss National Bank welcomed the lawmakers' stance with some caveats, saying that 90% is a good amount of CET1 capital to back foreign participations. The bank's vice president noted that profitability exceeds pre-pandemic levels and banks are weathering low interest rates well.