BERN, Switzerland — The Swiss government is preparing to scale back parts of a proposed regulatory package that could require UBS to raise as much as $24 billion in additional capital, according to three people familiar with the discussions.
The potential softening of the UBS capital rules comes after weeks of pushback from the banking industry and lawmakers concerned about Switzerland’s ability to remain competitive.
The regulatory overhaul, drafted after the government-brokered rescue of Credit Suisse last year, aims to strengthen Switzerland’s oversight of its largest financial institutions.
The package covers measures the government can impose directly and those that require parliamentary approval.
Two sources said officials are considering easing rules covering how banks value deferred tax assets and software, which account for roughly $11 billion of the total new capital UBS may need.
It remains unclear how extensive the revisions will be. A spokesperson for the Swiss finance ministry said the process was still underway.
“The decision making process on this matter is not yet complete, and the Federal Council has not yet reached a decision,” the ministry said, adding it could not comment further.
Analysts say the potential changes reflect a broader debate about how Switzerland balances financial stability with its long standing role as a global banking hub.
“Regulators want to avoid imposing requirements that go significantly beyond international norms,” said Martin Keller, a financial regulation expert at the University of Zurich.
“At the same time, they need to show the public that systemically important banks are adequately fortified.”
Stefan Stalmann, an analyst at Autonomous Research, estimated that easing deductions for deferred tax assets and allowing banks to retain half the value of software assets would reduce UBS’s capital needs by about $7 billion.
“It would still be a sizeable requirement, but far less disruptive for the bank’s strategic plans,” he said. Current proposals would bar deferred tax assets and certain intangible items from counting toward regulatory capital.
Switzerland’s approach, according to industry groups, exceeds some international standards. For example, the European Union maintains partial recognition of specific software assets, which reduces capital strain for major lenders.
UBS, the world’s largest wealth manager, has argued the combined measures could place Swiss institutions at a competitive disadvantage.
If fully implemented, the UBS capital rules would require the bank to recapitalize foreign subsidiaries at home, which accounts for the largest part of the $24 billion estimate.
The bank’s shares rose 4.1 percent after the Reuters report indicating the government was considering a softer stance, outperforming the broader financial sector.
Some Swiss lawmakers have urged restraint. “We support strong oversight, but we must avoid creating regulations that isolate our banking sector,” said Peter Baumann, a member of the center right FDP in Bern.
“We cannot afford to push global clients toward other financial centers.” Local business leaders echoed the concern.
“Banks are already navigating higher interest rates and stricter liquidity rules,” said Sabine Meier, who runs a Zurich based trade consultancy.
“Overly rigid capital demands could tighten lending for small and midsize firms.” However, not everyone is convinced easing is the right approach.
“Taxpayers bore the risks during the Credit Suisse collapse,” said Luc Bertrand, an economist at the Geneva School of Governance.
“If anything, stricter UBS capital rules are a reminder that too big to fail institutions must internalize their risks.” The government is expected to publish its ordinance covering the rules it can impose directly early in the second quarter of next year.
That ordinance would take effect in January 2027, while parliamentary measures are scheduled for implementation in 2028 or later. Two parliamentary committees have already urged the government not to exceed global standards.
Lawmakers will review the full package next year, where the debate is likely to intensify as political parties weigh economic risks against public pressure for tighter safeguards.
For UBS, the outcome will shape its post Credit Suisse integration strategy and its long term capital framework. People familiar with the talks said the bank is preparing multiple scenarios depending on how the UBS capital rules evolve.
The Swiss government’s deliberations underscore the country’s challenge in recalibrating oversight after a major financial rescue without undermining its vital banking sector.
As negotiations continue, officials, regulators and industry leaders remain divided on how far the revised UBS capital rules should go, leaving the final scope of the reforms uncertain.
