Bern: Switzerland is preparing to soften sections of a controversial regulatory package that would have forced UBS to raise tens of billions of dollars in additional capital, according to sources familiar with ongoing government deliberations. The shift signals a significant recalibration by Swiss authorities, who have been under pressure from political leaders, industry stakeholders, and global financial observers concerned about the potential economic fallout of excessively stringent rules.
According to senior government and industry sources, Swiss officials are now drafting changes that would “water down” specific components of the new capital regime particularly those affecting how certain balance-sheet items are valued. The original proposal required UBS to apply tougher valuations to deferred tax assets and capitalised software, two categories that, if recalculated under the stricter rules, would have added around $11 billion to the bank’s capital shortfall.
Authorities now appear prepared to ease these requirements, acknowledging concerns that rules of this magnitude could damage UBS’s competitiveness and burden Switzerland’s financial sector during a period of global economic uncertainty.
The regulations, proposed earlier this year, were part of a broader response to the collapse of a major Swiss bank in 2023, an event that forced UBS into a government-orchestrated takeover. In an effort to prevent future banking crises, regulators aimed to strengthen systemic buffers.
However, the proposed package would have required UBS to raise up to $24 billion in new capital an amount industry analysts criticised as unusually high for a single institution. The figure stemmed from multiple components: stricter asset-valuation rules, additional liquidity requirements, and, most significantly, a requirement for UBS to fully capitalise its foreign subsidiaries.
While the government may loosen the asset-valuation rules, sources emphasize that the push for better capitalisation of overseas units is likely to remain intact, meaning UBS could still face a sizable capital challenge even after revisions.
The initial proposal triggered swift criticism from business groups, financial analysts, and several Swiss cantons that depend heavily on banking-sector stability. UBS itself warned that such high capital demands risked weakening Switzerland’s global financial leadership by making its largest bank less competitive in international markets.
Economists also cautioned that reduced flexibility could limit UBS’s ability to expand operations, invest strategically, or return capital to shareholders all of which could have downstream effects on the national economy. Many also argued that an excessively strict approach could deter foreign investment at a time when Switzerland is seeking to maintain its attractiveness as a global financial hub.
The Swiss government’s willingness to soften the rules appears to reflect an evolving understanding of this delicate balance: bolstering banking stability without undermining the country’s premier financial institution. Officials are reportedly reconsidering the proportionality of the measures, acknowledging that some of the proposed changes may have gone beyond what was necessary to safeguard the system.
Nevertheless, regulatory authorities remain committed to addressing weaknesses exposed during the 2023 banking crisis. The rethink is therefore not expected to reverse the entire package, but rather to refine it in a way that avoids unintended economic consequences.
Despite the ongoing revisions, the Swiss finance ministry has declined to comment publicly, stressing that decisions will only be announced once the full regulatory package has been reviewed and formally adopted. Industry observers expect more clarity in the coming weeks, as the government seeks to finalize a balanced and economically sustainable framework.
For now, UBS is watching closely. While the anticipated easing offers relief from the most excessive burdens, the bank still faces a period of regulatory tightening just one that may now be more manageable and better aligned with Switzerland’s broader financial-sector goals.