Overview
- A parliamentary committee moved the compromise forward Monday, sending the draft to the full Council of States for debate and keeping a finish-line target of late 2026 for final rules.
- The proposal would cut the government’s original 100% Common Equity Tier 1 requirement for UBS’s foreign units to roughly 70–80%, which at an 80% floor lowers UBS’s extra CET1 need from about $20 billion to roughly $15 billion.
- Lawmakers would permit some Additional Tier 1 (AT1) instruments to fill part of the shortfall; past proposals from the Swiss People’s Party suggested AT1 could cover up to 50% of the requirement which would sharply reduce new equity needs.
- CET1 is high‑quality equity that absorbs losses first and gives regulators confidence in a crisis, while AT1 bonds are hybrid securities that can be converted or written down to absorb losses—a treatment that became legally and politically sensitive after Swiss regulators wrote Credit Suisse AT1s to zero in 2023.
- The compromise aims to balance taxpayer protection and Switzerland’s competitiveness by easing UBS’s capital costs, a change that could boost investor returns but will still face debate in the upper house and a likely tougher review in the lower house.