Core Viewpoint - UBS opposes Swiss government plans to tighten bank capital rules, arguing that the reforms would significantly increase costs, harm competitiveness, and negatively impact the economy [1][3]. Group 1: Financial Impact - UBS estimates that the proposed capital reforms would increase its capital needs by approximately $23–24 billion, primarily through additional Common Equity Tier 1 capital [2]. - The bank projects that these additional requirements would raise its annual costs by around $1.7 billion, jeopardizing the sustainability of its business model [2]. - UBS calculated that its market value underperformed compared to European and US banking peers by 27% from April 2024 to the end of the previous year, resulting in about $37 billion in lost shareholder value, alongside roughly $14 billion in costs related to integrating Credit Suisse [4]. Group 2: Regulatory Concerns - UBS argues that the proposals are based on extreme assumptions and would make Switzerland less competitive compared to other financial centers, especially in light of deregulation initiatives in Europe and the US [3]. - The bank highlights that regulatory uncertainty since the announcement of the updated regime in April 2024 has already affected investor confidence [3]. Group 3: Alternative Proposals - UBS contends that alternative options, which could achieve similar effects at a lower cost, have not been adequately considered, with the government rejecting these alternatives due to their failure to meet the extreme objective of zero risk tolerance [5]. - The bank advocates for Additional Tier 1 instruments and bail-in bonds to be included in meeting stricter capital requirements, suggesting that AT1s should align with practices in the European Union and United Kingdom [5]. Group 4: Government and Industry Response - Swiss authorities introduced the capital reforms in June to prevent another Credit Suisse-style failure and protect taxpayers, following UBS's acquisition of Credit Suisse in a state-orchestrated rescue in 2023 [6]. - The Swiss Bankers Association supports UBS's concerns, stating that the proposals are disproportionate, misaligned with global standards, and could undermine Switzerland's status as a financial center without significantly enhancing stability [7].