- UBS said recommendations from Switzerland’s upper-house economic committee would require parent bank UBS AG to hold about $13 billion of extra Tier 1 capital that could be met with Additional Tier 1 instruments.
- That amount would sit on top of $2 billion of extra CET1 from Federal Council ordinance changes and about $15 billion of CET1 already required after the Credit Suisse acquisition, UBS said.
- UBS said the recommendations would raise backing for foreign subsidiaries to 50% CET1 and up to 50% AT1, from 45% and 17% under current law.
ZURICH, Switzerland — UBS said recommendations from a Swiss parliamentary committee would require its parent bank, UBS AG, to hold about $13 billion of extra Tier 1 capital that could be met with Additional Tier 1 notes.
The Economic Affairs and Taxation Committee of the Council of States, or WAK-S, outlined the recommendations, UBS said in an emailed press release today.
The bank said the committee considered alternatives to what UBS called the Federal Council’s extreme proposals on banking regulation. The WAK-S recommendation is not enacted law.
Parent Bank Capital
UBS said the recommendations would require UBS AG to fully underpin investments in foreign subsidiaries with 50% Common Equity Tier 1 capital and up to 50% AT1 capital, compared with 45% CET1 and 17% AT1 under current law.
The bank estimated the extra parent-bank Tier 1 at about $13 billion, which it said could be met with AT1. That would be in addition to $2 billion of extra CET1 that UBS AG will need to hold after ordinance-level changes the Federal Council announced earlier this year, and about $15 billion of CET1 already required under existing rules after the Credit Suisse acquisition.
In total, including the WAK-S recommendation, UBS said UBS AG would be required to hold about $30 billion of extra Tier 1 capital since buying Credit Suisse.
Group Capital and AT1
In parallel, UBS said those ordinance-level changes are expected to eliminate $4 billion of CET1 capital at the Group consolidated level once they are implemented. The emailed statement did not net that Group figure against the parent-bank total.
UBS said it supports targeted adjustments to Swiss banking regulation that are internationally aligned and address the root causes of the Credit Suisse crisis, including aligning AT1 instruments more closely with international practice.
The emailed statement did not say when parliament would debate the recommendations or whether they will become law. UBS Group AG is listed in Zurich and New York.