Swiss Clampdown: Stricter UBS Regulations Post Credit Suisse Takeover

The Swiss government has proposed stricter regulations on UBS, following its takeover of Credit Suisse. These rules, which demand increased capitalization of foreign units, could require UBS to bolster its core capital by $26 billion. Though shares initially rose, concerns linger about the bank's competitive edge and compliance costs.

The Swiss government on Friday unveiled plans for tightening regulations on UBS after its acquisition of Credit Suisse. The proposals, highlighting increased capital requirements for foreign units, aim to reinforce taxpayer protection and prevent future financial turmoil similar to the 2023 Credit Suisse collapse.

The announcement led to a fluctuation in UBS shares, initially spiking up by 7% before apprehensions about the regulatory burden set in. Meanwhile, government officials assured that these proposals are targeted to ensure market stability.

Despite significant requirements anticipated over a six to eight-year transition, officials remain optimistic about UBS staying competitive. However, expert analysis suggests potential shifts in UBS's strategic focus, including asset sales or a relocation of headquarters to mitigate compliance costs.

(With inputs from agencies.)