UBS Chief Calls Lawmakers' Capital Fix Workable While Warning on Swiss Future
Published on 09/21/2026 at 06:40 | Editorial boerse-global.de
UBS CEO Sergio Ermotti has thrown his weight behind a parliamentary compromise that would let the Swiss banking giant meet tougher capital rules partly through AT1 bonds, even as he keeps up pressure on Bern over the cost of stricter alternatives.
In a newspaper interview ahead of a decisive vote in Switzerland's upper house, the Council of States, Ermotti put the price tag of the proposed overhaul at roughly USD 13 billion in additional capital. Crucially, that shortfall could be plugged entirely with subordinated AT1 instruments rather than common equity, softening the blow to the balance sheet. Management estimates the recurring cost of the arrangement at about USD 2 billion a year.
The proposal from the legislature's economic affairs committee (WAK-S) would require UBS AG to back its foreign subsidiaries with at least 50% hard core capital (CET1), with up to 50% permitted in AT1 bonds. That compares with the current mix of 45% CET1 and 17% AT1. Investors calculate that leaning more heavily on hybrid debt instead of pure equity could save the bank hundreds of millions annually, according to Reuters.
Boardroom and Management Strike Different Tones
The conciliatory note from the chief executive contrasts with the sharper warning issued by UBS Chairman Colm Kelleher, who said on Thursday that the bank would have to carefully review its future in Switzerland if the rules became so restrictive that it could no longer compete globally. Ermotti, for his part, rejected speculation about relocating the group's headquarters abroad, calling a continued Swiss domicile the best outcome for the company and dismissing reports of concrete relocation scenarios as baseless.
Should investors sell immediately? Or is it worth buying UBS?
The debate has its roots in the emergency takeover of Credit Suisse in March 2023, after which Swiss policymakers demanded firmer guardrails against systemic risk. Ermotti argued that UBS spared the country a damaging reputational hit at the time, while assigning part of the blame for Credit Suisse's collapse to the regulator Finma and the Swiss National Bank.
The Cost of Going Further
Should the Swiss government get its way, UBS would need to build roughly USD 20 billion in extra equity, a scenario Ermotti warned would carry annual costs of USD 3 billion. A separately floated minimum of 90% hard core capital would be similarly expensive, he said. The Swiss Bankers Association has thrown its support behind the lender's position, underscoring the persistent tension between the state's appetite for risk buffers and the earnings power of a globally active financial group.
Ahead of the vote, parliamentary backing for the committee's approach has been building. A group of lawmakers came out on Wednesday in favor of handing the government authority to set the finer details of the new banking rules, according to media reports. For UBS, the stakes in the process are about avoiding a competitive disadvantage versus Anglo-Saxon rivals.
Market Waits for the Next Signal
Investors have stayed cautious as the regulatory wrangling drags on. UBS shares closed Friday at EUR 43.71, down 0.9% on the day, yet the stock is still up 9.9% since the start of the year. The paper sits 9.3% below its 52-week high of EUR 48.19. With the Council of States due to vote on Wednesday, shareholders now face the next directional call on the lender's capital future.
Ad
UBS Stock: New Analysis - 21 September
Fresh UBS information released. What's the impact for investors? Our latest independent report examines recent figures and market trends.
