Swiss upper house votes for 90% CET1 capital backing plan, in blow to UBS

Switzerland's ​upper house of parliament on ​Wednesday voted in ‌favour of ​capital rules that would require UBS to back its foreign units with ‌90% Common Equity Tier 1 capital, dealing a blow to the bank, which had lobbied against it.

The capital rules bill, part ‌of measures drawn up following the 2023 collapse of Credit ‌Suisse, will now move to the lower house of parliament, with a final decision expected at the end of this year at the ⁠earliest, ​and more ⁠likely in 2027. The government had proposed making UBS back its foreign units ⁠to the tune of 100% CET1 capital, a demand that ​UBS said was excessive and likely to make it less ⁠competitive.

The upper house narrowly rejected the government's option before backing the ⁠90% ​CET1 capital backing option. UBS CEO Sergio Ermotti said on Tuesday the 90% CET1 option was no real compromise ⁠and lobbied for a more moderate proposal that would allow the ⁠bank ⁠to back foreign units with 50% CET1 capital and 50% Additional Tier 1 capital, which ‌is cheaper ‌to hold.