UBS chief executive Sergio Ermotti rejected a proposal requiring 90% Common Equity Tier 1 backing for the bank’s foreign subsidiaries, saying it offered no meaningful compromise over the Swiss government’s 100% plan. Speaking at a Bank of America event on 22 September, he instead supported a parliamentary alternative split evenly between CET1 and Additional Tier 1 capital. Ermotti described that option as costly for the bank but "still a balanced way". Switzerland’s upper house is due to vote on the competing approaches on 23 September.
The government proposed full CET1 backing for foreign subsidiaries as part of reforms prompted by Credit Suisse’s 2023 collapse and emergency takeover by UBS. A committee of the upper house offered an alternative allowing half of the requirement to be met with AT1 instruments, while another proposal would set the CET1 share at 90%. The measures would raise the current backing standard and could require UBS to hold substantial additional capital.
COMPETING CAPITAL OPTIONS
Bloomberg, citing an interview with the Neue Zürcher Zeitung, reported that Ermotti had previously described the 50-50 proposal as "bearable" while saying UBS was not happy with it. Ermotti said that approach would still require UBS to build about $13 billion of additional Tier 1 capital. By contrast, the Swiss authorities want UBS to carry roughly $20 billion more in CET1 capital.
Swiss business associations have also urged lawmakers to soften the government plan, arguing that tougher requirements would erode the bank’s competitiveness, drive up financing costs and restrict lending to companies. Finance Minister Karin Keller-Sutter, backed by the Swiss National Bank, has argued that full CET1 backing protects taxpayers by making shareholders rather than the public bear losses.
THE VOTE WILL NOT END THE PROCESS
UBS has repeatedly argued that stricter capital rules would raise the cost of growth and make the bank uncompetitive. Ermotti’s latest remarks clarified that the bank does not view the 90% proposal as a middle ground.
The 23 September upper-house vote is the next concrete milestone, but it will not settle the legislation. The selected proposal must continue through Switzerland’s parliamentary process, including consideration by the lower house, and further changes remain possible. Final approval is expected at the end of 2026 at the earliest, and more likely in 2027.