The upper chamber approved the proposal by a wide margin, requiring UBS's domestic unit to hold equity capital worth 90% of the value of its subsidiaries abroad. UBS has estimated that stepping up to 90% would translate into roughly $16 billion in additional CET1 capital. The bank pushed back after the vote, saying, "This political outcome is not a compromise and fails to address the root causes of the Credit Suisse collapse," and added, "As the parliamentary process continues, UBS will focus on protecting its long-term interests."
Senators weighed three routes: the government's call for 100% CET1 backing, a 90% CET1 approach, and the AT1 option. The upper house chose the 90% version, a relatively modest shift from the original 100% plan. Finance Minister Karin Keller-Sutter has backed the 90% decision and has argued her plan is meant to ensure UBS can sell businesses abroad in a crisis without draining capital at home. The measure now moves to the lower chamber for debate.
The Swiss National Bank welcomed the lawmakers' stance with caveats. "90% is a good amount of CET1 capital to back foreign participations," Vice President Antoine Martin said.
On Thursday the SNB kept its policy rate unchanged at zero, raised its inflation projections, and toned down its earlier threat to step in to weaken the franc. Officials said running with the lowest policy rate globally is not a significant risk for Swiss lenders. Martin said profitability exceeds the level a year ago, at the time the benchmark was reduced to zero. He added that low rates can be "a challenge," especially for banks "focused on the domestic market," but "it looks like they're weathering this challenge well."
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If the 90% proposal becomes law, UBS would be looking at about $16 billion more in equity at its Swiss unit, with the finer points still up for debate in the lower chamber. Bigger buffers can change how banks price risk, fund growth, and return cash. Keep an eye on where lawmakers land and whether the final rule sticks with pure CET1 or makes room for other instruments.
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