UBS and a Turning Point for Swiss Banking Regulation
The Swiss government is preparing to soften a portion of the pending banking-regulation package that – as originally drafted – would have forced UBS to raise up to $24 billion in additional capital.
The planned easing of valuation rules for certain intangible assets could reduce that burden by as much as $7 billion – a move that may materially reshape the bank’s capital outlook and investors’ positioning, according to newswire «Reuters».
Under the current proposal, Swiss regulators would require UBS to fully capitalise assets such as in-house software and deferred tax assets. According to people familiar with the matter, the government now plans to revise the valuation approach, allowing more favourable treatment of these items.
These assets accounted for roughly $11 billion of the extra capital UBS might need to raise. The proposed change could lower that amount substantially. At least one analyst estimates that the combination of eliminating deferred tax-asset deductions and allowing partial recognition of software value could save UBS up to $7 billion.
Why This Matters
The broader regulatory package – partly introduced in response to the collapse of Credit Suisse in 2023 and its government-backed takeover by UBS – aimed to tighten capital buffers and reduce systemic risk in Switzerland’s banking sector.
One key measure would require UBS to fully capitalise foreign subsidiaries, a step that could account for the bulk of the proposed $24 billion capital increase.
From UBS’s perspective, the proposed rules threatened to place the bank at a competitive disadvantage relative to global peers – potentially undermining its business model as a global wealth manager. The threat of relocating its headquarters abroad has reportedly been floated internally if regulation becomes excessively burdensome.
What Comes Next
The legal framework under scrutiny is split between measures the government can enact via ordinance and those requiring parliamentary approval. The softened valuation rules fall into the first category and are expected to be published in early Q2 of 2026, with implementation slated for January 2027.
However, the measures requiring full capitalisation of foreign subsidiaries remain on the table – portions that are likely to be subject to intense parliamentary debate before being enacted, possibly not before 2028.
Breathing Room
For investors, the potential easing signals a recalibration: a balance between regulatory safeguards and maintaining Switzerland’s competitiveness as a global banking hub.
For UBS it offers breathing room to preserve shareholder returns and strategic flexibility without compromising long-term stability.
