UBS suffered a setback in Switzerland’s parliament after the Council of States backed a proposal requiring the bank to fund 90% of the value of its foreign subsidiaries with top-quality equity capital. The decision rejected the capital structure favoured by UBS and its CEO, Sergio Ermotti. It also escalated the political battle over how heavily Switzerland’s largest bank should be buffered following its takeover of Credit Suisse.
Ermotti’s Campaign To Shift Vote Fails
Ermotti had mounted a public campaign against both the Federal Council’s 100% model and the upper chamber’s 90% alternative. He said on September 22 that the 90% structure was “not a real compromise,” arguing that it would leave UBS at a competitive disadvantage against international peers.
His position put him in an unusually public clash with Finance Minister Karin Keller-Sutter. Ahead of the vote, Keller-Sutter defended stronger protection for taxpayers, while Ermotti warned that excessive requirements could harm UBS, its clients and Switzerland’s standing as a financial centre.
Swiss business groups also lobbied lawmakers to avoid what they called disproportionate requirements, warning of potential consequences for the economy and the country’s financial-sector competitiveness. The Council of States nevertheless selected the 90% route, which largely reflects the Federal Council’s push for a much stronger equity buffer.
Upper House Backs 90% Rule
The Council of States, parliament’s upper chamber, voted 29–16 on Wednesday, 23 September 2026, in favour of requiring systemically important banks with foreign subsidiaries to back 90% of the value of those holdings with Common Equity Tier 1 capital, or CET1.
CET1 is banks’ highest-quality loss-absorbing capital, mainly ordinary shares and retained earnings.
The outcome is less severe than the Federal Council’s original proposal for 100% CET1 backing. But it is substantially tougher than the compromise UBS had argued for: a 50:50 mix of CET1 capital and Additional Tier 1, or AT1, bonds. AT1 debt is less costly for banks than equity but provides a lower-quality buffer in a crisis.
The vote is a clear setback for UBS.
UBS said the 90% formula would represent an “excessive tightening” of Switzerland’s capital regime.
UBS Estimates A USD 16 Billion Impact
UBS said the Council of States’ 90% proposal would require the Swiss parent, UBS AG, to hold approximately USD 16 billion more in CET1 capital. That estimate is in addition to around USD 2 billion of CET1 capital required under earlier ordinance-level measures announced this year.
The figures should be distinguished from the government’s original 100% proposal. Bloomberg reported that the full-backing plan could require UBS to raise up to USD 20 billion in additional capital.
UBS has said that, when combined with other measures introduced after its 2023 acquisition of Credit Suisse, the additional CET1 capital requirement at UBS AG could reach roughly USD 33 billion. This is the bank’s own combined estimate, rather than an immediate bill or a capital increase that parliament has already imposed.
Market Update
UBS shares erased earlier gains and traded little changed after Wednesday’s vote. That outcome suggests investors had already partly priced in a demanding capital decision, even as the precise final rule remains unresolved.
Reports of a sharp UBS decline on Tuesday should be treated with caution. The bank was under pressure ahead of the vote as investors weighed regulatory risk, but market moves reflected multiple overlapping factors, including the ongoing political debate and positioning around the legislative decision.
Separately, UBS on Tuesday reached a €5 million settlement with Dutch prosecutors over a legacy Credit Suisse tax matter involving 12 former Dutch clients. The issue attracted attention but was smaller in financial terms than the capital dispute now facing the bank.
What’s Next For UBS?
The latest vote prompted local media to ask whether Ermotti should leave UBS, arguing that the bank chief’s lobbying campaign had failed and that he had made the regulatory confrontation overly personal.
Ermotti returned as UBS chief executive in 2023 to lead the emergency takeover and integration of Credit Suisse. The present conflict highlights the political consequence of that rescue: policymakers want guarantees that an enlarged UBS can be stabilised or resolved without another taxpayer-backed intervention.
The bill now moves to the National Council, parliament’s lower chamber. A final decision could be reached by the end of 2026 at the earliest, but Reuters and Bloomberg report that 2027 is more likely. If the two chambers disagree, the proposal must go through further rounds of parliamentary reconciliation; a referendum could extend the process further still.
UBS has not disclosed a detailed plan for how it would meet any final higher requirement. If the stricter framework is enacted, the bank could potentially respond through retained earnings, adjustments to shareholder distributions, capital issuance, balance-sheet changes or a combination of these measures. Those remain possible responses, not announced actions.
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