The Swiss Senate's upper house committee on Monday approved a proposal that UBS would only need to back 50% of its foreign subsidiaries' capital with the highest-quality bank capital, common equity Tier 1 (CET1) capital, at a ratio of 50%. This is a setback for the government, which had sought 100% backing with CET1 capital. During deliberations on bank regulation following the collapse of Credit Suisse, the Senate's economic affairs and taxation committee said UBS should be allowed to use lower-cost additional Tier 1 (AT1) capital for the remaining 50%. Committee chairman Erich Ettlin of the Center party said, "This is not a victory for UBS, but a solution that serves Switzerland." The committee proposed introducing an additional trigger at a CET1 capital ratio of around 11%, below which UBS would be required to suspend dividends and share buybacks and reduce bonuses. The new bank regulation proposal was passed with 10 votes in favor, 2 against, and 1 abstention. It will now go to a vote in the full Senate and then be reviewed by the lower house.
UBS Group AGSwiss Senate committee approves easing UBS capital rules, allowing only 50% CET1 backing for foreign subsidiaries.
