A sign in German that reads the “part of the UBS group” in Basal on May 5, 2025.
Fabris Cofterini | AFP | Getty images
The Swiss government on Friday proposed strict new capital regulations, for which banking veteran will be required UBS To organize an additional $ 26 billion in the core capital, after the acquisition of its Striken rival credit suis in 2023.
Measures will also mean that UBS will need to redeem its foreign units and potentially completely. Buyback less share.
The government said in a statement on Friday, “The increase in Going-Cancer requirement needs to be completed up to US $ 26 billion of CET 1 capital, so that AT1 bond holdings can be reduced by about 8 billion USD.”
So this remedy is an additional $ 26 billion in core capital, but new capital requires only $ 18 billion. This is $ $ 2 billion less than the estimated $ 20 billion by JP Morgan earlier this week.
After the announcement, UBS shares jumped 6%.
Johan Sholtz, senior equity analyst at Morningstar, said the news was “as bad as it would be for UBS”.
Banking giants “can now advocate for some concessions and take some action to reduce the impact, for example, above some additional capital from their subsidiaries,” Sholtz said. He said that when the conversation starts immediately, the measures for UBS would be phased for a long time, as soon as possible it will be fully applicable in 2034.
Swiss National Bank said that it supported measures from the government as they would greatly strengthen UBS ‘flexibility “.
“Along with reducing the possibility of a large systematically important bank, UBS, such as in financial crisis, this remedy also enhances a bank room for maneuver to stabilize itself in a crisis through its own efforts. It is less likely that UBS is to be granted bail by the government in the crisis incident.”
‘too big to fail’
UBS has been struggling with the audience of tight capital regulations since achieving strategic errors in credit suis, mismanagement and scams after receiving the second largest bank on a cut-price.
The death of the banking veteran’s shock also brought Swiss financial regulator Finma under fire for the last time of alleged rare supervision of the bank and its intervention.
Swiss regulators argue that UBS must have strong capital requirements to protect the national economy and financial system, which topped the $ 1.7 trillion in 2023, almost doubled in last year’s estimated Swiss economic production. UBS insists that it is “not too big to fail” and that additional capital requirements – set to eliminate their cash liquidity – will affect the bank’s competition.
At the center of deadlock, concerns are being suppressed by UBS’s ability to buffer any possible loss in its foreign units, where till now, the original bank had the duty to return 60% of capital with capital.
High capital requirements can reduce the bank’s balance sheet and credit supply by reducing the desire of an lender by increasing the funding cost and lending to lend – as well as their appetite to risk. For shareholders, there will be a possible impact on discretionary funds available for distribution for notes, including dividends, share buybacks and bonus payments.
Johan Sholtz, senior equity analyst at Morningstar, said, “Credit Suisse’s heritage businesses should be freed and reduced costs for UBS, most of these benefits can be absorbed by strict regulatory demands,” Johan Shaltz, Morningstar’s senior equity analyst of Morningstar said in a noted.
“Such measures can be well placed over the people faced by rivals in the United States, pressurizing the returns and reducing the possibilities to reduce its long -term evaluation difference.
Through its main global wealth management division, the possibility of the widespread Swiss Capital Rules and the widespread American presence of UBS is already weighing on the bank’s fate as the White House business tariff. In a dramatic turn, bank Lost your crown In mid -April, as the most valuable lender of continental Europe by market capitalization for Spanish giants Sentnder.
– Ganesh Rao of CNBC contributed to this report.
