UBS may gain from capital rules going to Swiss upper house first, lawmakers say

Core Viewpoint - UBS may gain a potential advantage in the Swiss government's plans to raise capital requirements due to the proposal being assigned to the upper house first, which could lead to a softer outcome than if it were discussed in the lower chamber [1][2]. Group 1: Legislative Process - The Swiss upper house's Economic Affairs and Taxation Committee is scheduled to discuss the proposed banking regulation bill on May 4, following its publication expected by the end of April [2]. - The legislative process for the capital requirements bill is anticipated to be lengthy, with the government aiming for a more favorable discussion in the upper house [2]. Group 2: Capital Requirements - The proposed law will increase the capital UBS must hold for its foreign subsidiaries from 60% to 100%, which UBS argues could negatively impact its competitiveness and that of Switzerland's financial sector [4]. - A compromise proposed by some lawmakers could allow UBS to use AT1 bonds to partially back foreign subsidiaries instead of relying solely on more expensive Common Equity Tier 1 capital [5]. Group 3: Future Regulations - Additional banking regulations, categorized as "too big to fail" rules, are expected to be introduced by 2029 at the earliest, with an ordinance set to come into force in 2027 [3].