Switzerland's Federal Council confirmed on Wednesday it will require UBS to hold roughly $20bn of additional high-quality capital against its foreign subsidiaries, the core of the post-Credit Suisse "too big to fail" reform package. The figure is lower than the $26bn Bern initially flagged in June, but UBS puts the real impact closer to $22bn and calls the proposal "extreme".
The overhaul comes in two parts. A government ordinance — which does not need parliamentary approval — will phase software assets out of capital over three years and, for now, spares deferred tax assets (tax credits a bank can deduct from future taxable profit), wiping about $4bn of CET1 (common equity tier one, the highest-quality core capital) from next January. The second and larger leg, forcing UBS to fully back its overseas units with parent-level CET1 for around $20bn extra, goes to parliament in June and could still be diluted. UBS shares closed 0.15% higher in Zurich.
Since absorbing Credit Suisse in 2023, UBS's balance sheet dwarfs Switzerland's economy, which is why Bern is moving tougher than Washington. The Swiss Bankers Association and 16 cantons oppose the package, warning it undermines international competitiveness; finance minister Karin Keller-Sutter argues the state cannot shoulder another Credit Suisse-style failure. Source: Financial Times, 22 April 2026, Mercedes Ruehl and Simon Foy.
The story in one line. Bern sticks to the core of its post-Credit Suisse capital reform, forcing UBS to raise about $20bn — despite months of pushback from the bank and business groups.
Key numbers
- $20bn — additional core capital UBS must hold against foreign subsidiaries
- $22bn — UBS’s own estimate of the real capital hit
- $26bn — initial Federal Council projection in June 2025
- $4bn — net CET1 wiped out by ordinance changes (software, DTAs) from January
- 3 years — transition period for phasing software out of capital, in line with EU rules
- 16 cantons — oppose the package alongside UBS and the Swiss Bankers Association
- 0.15% — UBS share price move on Wednesday in Zurich
Why it matters
This is the central test of whether Switzerland can run a globally systemic bank after absorbing its failed peer. Two parts matter differently: the ordinance (software + deferred tax assets) imposes $4bn of damage and is locked in from January; the parliamentary leg ($20bn against foreign subsidiaries) goes to the chamber in June and lawmakers may dilute it. CET1 (common equity tier one) is the top-quality capital that absorbs losses first; requiring it at the Swiss parent bank for foreign subsidiaries is meant to stop overseas losses eating the group and to make parts saleable in a crisis.
Takeaway
UBS is getting a narrower but still binding leash. The real number to watch is the $20bn parliamentary leg — if it survives the June debate broadly intact, Switzerland will have the toughest bank-capital regime among major financial centres, and UBS will either compress returns or sell pieces of its foreign footprint.
Source: Financial Times, 22 April 2026, Mercedes Ruehl and Simon Foy.