- Swiss lawmakers are divided as they debate stricter UBS capital rules after Credit Suisse’s collapse.
- UBS warns tougher equity requirements could add $20B in capital pressure and impact shareholder returns.
- Switzerland also weighs banking stability as crypto exposure and Bitcoin reserve talks lose momentum.
Swiss lawmakers in Bern have opened a key debate on new capital rules for UBS, as pressure grows to tighten banking oversight after the 2023 Credit Suisse collapse. At the center of the discussion is whether UBS should fully fund its foreign operations with core equity or rely partly on cheaper capital buffers. The outcome could reshape Switzerland’s biggest bank and influence its global competitiveness.
As per Reuters, the government backs stricter rules requiring UBS to hold full Common Equity Tier 1 capital against overseas subsidiaries. However, some lawmakers want to soften the approach by allowing limited use of Additional Tier 1 instruments. UBS has warned that tougher rules could force it to raise about $20 billion in extra capital and may affect future buybacks and shareholder returns.
Parliament Split Over Bank Safety Rules
Lawmakers remain split as the debate unfolds across Switzerland’s political blocs. The upper house committee leans closer to UBS’s arguments on competitiveness, while the lower house pushes for stronger safeguards after the Credit Suisse collapse. As a result, centrist parties could determine the final direction of the rules.
Finance Minister Karin Keller-Sutter continues to press for tighter supervision to prevent another banking crisis. Additionally, academics argue that AT1 capital does not absorb losses as reliably as core equity. UBS, meanwhile, has described the proposals as “extreme” and warned they could place long-term pressure on its global operations.
Crypto Exposure Adds New Dimension to UBS Strategy
UBS has also quietly increased its exposure to digital assets through regulated investment products. SEC filings show the bank holds about $1.5 million in XRP-linked exchange-traded products. Additionally, it holds a smaller position in a Grayscale XRP fund. While the amounts remain small, the move reflects growing institutional interest in crypto beyond Bitcoin and Ethereum.
Meanwhile, Switzerland’s debate over Bitcoin reserves has cooled after campaigners failed to collect enough signatures for a referendum. The proposal aimed to require the Swiss National Bank to hold Bitcoin alongside traditional reserves. However, authorities rejected the idea, pointing to concerns over volatility and liquidity.
Advocates point out that Bitcoin would help Switzerland become less dependent on dollar and euro investments. Moreover, they view it as being politically neutral and aligned with Switzerland’s approach towards finance. Nonetheless, central banks remain wary of cryptocurrency and prefer stability in their policies.
Related: Australia Seizes $5.7M Bitcoin in Darknet Crackdown
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