Swiss capital reform could trim UBS earnings by about 9 percent

Switzerland’s parliament has adopted a capital-reform proposal that obliges UBS Group to support 90% of the value of its overseas units with CET1 equity, a stricter requirement than the bank favours but below the government’s 100% target. RBC analysts estimate the rule will reduce UBS’s earnings per share by about 9%, forcing the bank to hold roughly US$16 billion of additional high-quality capital at its domestic unit and potentially undermining its international competitiveness.

UBS has vowed to continue opposing the rule and had previously sought to meet the requirement using AT1 junior debt, a path now blocked. The bank is also reportedly revisiting options such as a merger with another large international bank, though divestitures are not seen as likely. The measure now moves to the lower house, with debates scheduled for October and November and a winter session later in the year. Some lawmakers have suggested a softer 75% CET1 backing, indicating a possible compromise if the two chambers diverge.