UBS vs Switzerland
Switzerland's National Council Economic Affairs Committee has successfully delayed the Federal Council's plans to tighten UBS capital requirements, voting by tie-breaking margin to demand a comprehensive regulatory package approach.
A parliamentary motion, prevents staggered implementation and could delay UBS foreign subsidiary capital rules by six months and other measures by one year. The controversial requirement would force systemically important banks to fully capitalize foreign subsidiaries instead of current 45-60% levels, potentially requiring UBS to raise $23 billion additional capital without optimization measures. Finance Minister Karin Keller-Sutter's decision to pursue legislative rather than ordinance-based regulation has enabled parliamentary intervention, despite Federal Council preference for faster implementation.
Critics argue the delay represents strategic timing to exploit fading Credit Suisse crisis memories, noting that others previously demanded 20% capital ratios in March 2023—requirements now forgotten. The motion specifically cites concerns about "unnecessary negative impacts on businesses and households" while demanding comprehensive impact assessment. Additional $9 billion capital requirements from stricter asset valuation rules would also face delays.
Forecast Scenarios (GCHQ)
Likely (65%): Gradual Implementation with Weakened Requirements
Parliament eventually approves modified UBS capital requirements by late 2026 with reduced stringency, potentially lowering foreign subsidiary capital ratios to 70-80% instead of 100%. The comprehensive package approach enables trade-offs between different regulatory measures, allowing UBS to minimize total capital impact through strategic concessions. Final implementation occurs in 2027-2028 with extended transition periods.
Realistic Possibility (50%): Extended Deadlock Requiring Federal Council Intervention
Parliamentary opposition successfully blocks comprehensive package passage, forcing Federal Council to implement some measures through ordinance powers by 2027. Political stalemate continues through multiple legislative sessions as banking lobby maintains opposition coalition. UBS benefits from continued uncertainty while systemic risk concerns mount among international regulators and rating agencies.
Unlikely (30%): Swift Parliamentary Approval Following External Pressure
International regulatory pressure or renewed financial sector concerns force rapid parliamentary consensus by early 2026. External factors such as EU banking union developments or US regulatory changes create urgency that overcomes domestic opposition. UBS faces accelerated compliance timeline with limited optimization opportunities, potentially requiring emergency capital raising measures.
