UBS Faces Regulatory Burden After Swiss Parliamentary Vote

UBS Chief Executive Sergio Ermotti has expressed his disappointment over the Swiss parliamentary vote that tightened capital requirements for foreign subsidiaries. The upper chamber of Switzerland's parliament, the Council of States, backed a minority motion requiring foreign subsidiaries to be capitalized with 90% hard core capital (CET1), setting aside the compromise the bank had been lobbying for.

The decision, which passed by 29 votes to 16, would force UBS to hold an additional $16 billion in CET1 capital. The government under Finance Minister Karin Keller-Sutter had originally pushed for full 100% backing, while the Swiss National Bank welcomed the move as a good step towards financial stability.

UBS has warned that confirming the decision at the end of the legislative process would amount to a disproportionate tightening of Swiss capital rules. The bank argues that this would miss the actual causes of Credit Suisse's 2023 collapse and could lead to a lasting competitive disadvantage against international rivals, such as US banks.

The regulatory burden is substantial, with UBS requiring an additional $33 billion in capital, including $22 billion at the parent company level. This would tie up money that would otherwise fund buybacks, dividend increases or growth initiatives. However, the operational picture offers some counterweight, with UBS posting a net profit of $2.8 billion in the second quarter of 2026 and an underlying return on hard core capital of 16.4%.