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A sign in German, which proclaims the “part of the UBS group” in Basel on May 5, 2025.
Fabrice Coffrini | AFP | Gets the image
Switzerland’s government on Friday proposed strict new capital rules to require a banking giant UBS To hold an additional $ 26 billion in Core Capital, after the 2023 Credit Suisse cordial competitor.
Measures also mean that UBS will need to fully earn your foreign divisions and potentially Spend less reproach stock.
“The increase in the transfer requirements must be fulfilled to $ 26 billion in CET1 to allow AT1’s $ 8 billion bond stock,” the statement said in the statement that UBS “hold additional level bonds (AT1).
Thus, measures amounted to an additional $ 26 billion, but the requirement of only $ 18 billion in new capital. This is $ 2 billion lower than $ 20 billion, estimated by JP Morgan earlier this week.
After the announcement of the UBS stock, they jumped by 6% and finished the trading session on Friday by 3.8% higher.
The Swiss Bank will become more stable and attractive in areas such as asset management, Switzerland’s finance Minister Karin Keller said on Friday’s press briefing. “I do not believe that competitiveness will be violated, but it is true that growth abroad will become more expensive,” she said in the comments reports by Reuters.
UBS said that when it supports “in principle” most regulatory offers announced on Friday, it strongly disagrees with the “extreme” increase in capital requirements. Based on the results of the first quarter of the bank, its CET1 capital coefficient is from 12.5% to 13% with a previously transferred capital firm that it would be required to hold about $ 42 billion in CET1.
The Bank has retained its goal to achieve the main CET1 capital returns of about 15%, and confirmed its intentions to return capital for the year.
“UBS will actively participate in the counseling process with all the relevant stakeholders and promote the assessment of the alternative and effective solutions that lead to suggestions for changing regulation with reasonable cost/results. UBS will also appreciate the appropriate measures if it is possible, to resolve the negative consequences, which will have extreme rules.”
Johann Scholtz, senior analyst Morningstar, noted that the news was “as bad as for UBS”.
The banking giant “can now lobby for some concessions and take some actions themselves to soften the impact, such as up the capital from its subsidiaries,” Scholtz said. He added that while the negotiations would start immediately, the UBS will unfold to deploy measures with the earliest that it would be applied in the full 2034.
JPMorgan analysts, led by Kian Obukhassin, also emphasized that a long time of six years for UBS to calculate investment in foreign units is a “positive” result for the bank. With the completion of the expectation around 2027, JPMorgan counts on the full implementation by 2033.
The UBS is expected to receive about $ 12 billion (annual) income with dividends of about $ 3 billion, which means that the bank can “execute its” gap in capital “up to 2033 and continues to buy,” the analysts said.
The Swiss National Bank has stated that it supports measures from the government as they will “significantly strengthen” UBS stability.
“Like a decrease in the likelihood of a great bank, such as UBS, which gets into financial suffering, this measure also increases the bank’s room for maneuver to stabilize its efforts through its efforts. This makes the UBS less likely to be evacuated by the government in the event of a crisis,” the statement said on Friday.
“Too big to fail”
UBS is fighting the ghost of tougher capital rules since the acquisition of the second largest bank in the country in reducing the cost after years of strategic mistakes, mismanagement and scandals in Credit Suisse.
The strike death of the banking giant also led the Swiss financial regulator to the Finma under the fire for perceived scarce supervision of the bank and the final terms of its intervention.
Swiss regulators claim that UBS must have higher capital requirements to protect the national economy and financial system, given the bank balance of 1.7 trillion. In 2023, dollars, which is about twice the projected Swiss economic output last year. UBS insists that it is not “too big to refuse” and that additional capital requirements are set to throw away its money liquidity – affect the bank’s competitiveness.
The confrontation is based on concern about UBS’s ability to record any promising losses in its foreign units, where it is still obliged to return 60% of capital with capital in the parent bank.
Higher capital requirements can reduce the bank balance and credit offering by strengthening the cost of financing the lender and rejecting their willingness to borrow – as well as reducing their appetite. For shareholders, it is noted that this will be a potential impact on discretions available for distribution, including dividends, redemptions and bonus payments.
“While Credit Suisse’s hereditary enterprises should be released and reduced the cost of UBS, most of these income may be absorbed by tightened regulation requirements,” said Johang Scholtz, a senior analyst at Morningstar, in a note preceding the announcement of the Finema.
“Such measures may impose UBS’s capital requirements above those faced by rivals in the US, exerting profitability and a decrease in prospects for narrowing their long -term assessment.
The prospect of Swiss Capital and the wide presence of UBS in the US through the main world riches department comes when trading tariffs in the White House already weigh the success of the bank. In a dramatic turn bank lost its crown As the most valuable lender of Continental Europe for the Spanish Giant market capitalization in mid -April.
– Ganesh Rao to CNBC contributed to this report.
