Overview

• Under the draft rules, UBS must raise its Common Equity Tier 1 ratio by roughly 4.5 percentage points, adding about $26 billion to its core capital base.
• UBS will be required to fully fund its foreign subsidiaries with core capital, making overseas expansion and acquisitions more expensive.
• Authorities warn the tougher capital thresholds could lead UBS to trim share buybacks and accept slightly lower returns on equity.
• The Swiss National Bank endorsed the proposal, saying the measures will significantly strengthen the bank’s shock-absorbing capacity.
• Senior analysts caution that higher capital requirements may widen UBS’s valuation gap with U.S. rivals and limit discretionary payouts.