RBC analysts predict that UBS could experience a reduction in its earnings per share (EPS) of up to 10% if new Swiss capital rules are implemented. The proposed changes, which require UBS to back foreign participations with 90% CET1 capital, would necessitate an additional $16 billion in CET1 capital at UBS AG. This comes on top of approximately $2 billion in additional CET1 capital already required at UBS AG from earlier ordinance-level measures, and $15 billion under existing regulations following the Credit Suisse acquisition.
In total, UBS would be required to hold around $33 billion of incremental CET1 capital since the acquisition of Credit Suisse. This substantial increase in capital requirements is seen as a setback for UBS, which has criticized the decision by the Council of States, stating it is not a compromise and fails to address the root causes of the Credit Suisse collapse. UBS also highlighted that the political outcome disregarded concerns from a majority of respondents in the consultation process.
The annual cost resulting from the acquisition, combined with these new capital requirements, is estimated to be around $2.5 billion. While the Swiss National Bank cautiously welcomed the plan, and Finance Minister Karin Keller-Sutter has championed the higher capital demands, UBS has expressed frustration, arguing that these requirements would make them uncompetitive against global peers. The ongoing parliamentary process means a final decision is not expected until 2027 at the earliest.
