Swiss Senate paves way for direct government action on UBS capital rules

The Swiss Senate has turned down a proposal that would have mandated parliamentary review of all new capital regulations for UBS, Reuters has reported.

This outcome allows the government to directly move ahead with measures that could potentially raise UBS's core capital requirements by around $9bn.

In June, the government outlined a strategy aimed at minimising the bank's risk exposure, which included a directive that UBS would no longer be permitted to include software and deferred tax assets in its core capital calculations.

The government projected that this adjustment would lead to an increase in capital requirements by approximately $11bn, although certain threshold modifications could reduce this by at least $1.8bn.

The government plans to implement these changes through ordinance measures, which would establish a baseline for additional capital requirements for UBS, in the context of broader capital needs related to its international subsidiaries.

Collectively, the requirements proposed by the government indicate that UBS may need to secure up to $26bn in additional core capital to safeguard against potential financial crises, according to the news agency.

These actions are part of a wider effort to strengthen banking regulations in Switzerland in the wake of the 2023 collapse of Credit Suisse, which was later acquired by UBS.

UBS has raised objections to the proposed capital regulations, claiming they are disproportionate and could place the bank at a competitive disadvantage compared to its global peers.

Following the introduction of the proposal, parliamentary committees expressed concerns about the process, suggesting that all new capital regulations affecting Switzerland's major banks should be reviewed as a unified package by parliament.

However, this suggestion was ultimately rejected, as the Senate voted against it, mirroring a previous decision by the lower house.

"Swiss Senate paves way for direct government action on UBS capital rules" was originally created and published by Private Banker International, a GlobalData owned brand.

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