Swiss Senate backs tougher capital rules for UBS

29 votes to 16 put Switzerland’s largest bank on a tougher regulatory path on Wednesday, September 23, 2026. The Council of States approved a requirement for UBS to back 90% of its foreign holdings with Common Equity Tier 1 capital, the highest level to emerge from the parliamentary debate so far.

The decision strengthens the capital cushion that would stand behind UBS subsidiaries abroad during a crisis. The current requirement is 45% core capital, meaning the Senate proposal would roughly double the applicable buffer. Common Equity Tier 1 capital consists primarily of shareholders’ equity and retained earnings, giving supervisors a more durable form of protection than debt instruments that may convert or be written down under stress.

The vote marks a setback for UBS and for business groups that had urged senators to accept a weaker compromise. That plan would have required 50% CET1 capital and allowed AT1 bonds for the remainder. Senators rejected it. They also rejected the Federal Council’s call for full, 100% backing with hard equity.

The bill now moves to the National Council. Parliament is unlikely to settle the matter before December at the earliest, and the final decision could come in 2027.

Around $15 billion in additional hard capital is the figure UBS says it would need if the Senate’s proposal becomes law. The bank does not face an immediate solvency crisis, according to the reporting around the vote. Its concern is the effect of the rule on returns, shareholder expectations and the way it competes with international banks.

UBS has several potential routes to meet the requirement. It could issue new shares, retain a larger share of its profits, reduce distributions to shareholders or shrink selected foreign subsidiaries. Each option carries a cost. Raising equity can dilute existing shareholders. Retaining earnings can weaken the appeal of the stock to investors seeking dividends. Selling or reducing foreign operations could alter the global business model that UBS built after taking over Credit Suisse.

The bank’s recent earnings provide financial room for a gradual adjustment. UBS made $7.8 billion in profit in 2025 and reported another $5.8 billion in the first half of 2026. SRF reported that the bank could build the required buffer relatively quickly by retaining profits and suspending dividends, although that would intensify the dispute with shareholders.

UBS chief executive Sergio Ermotti has argued that existing rules are strong enough. The Senate’s vote shows that many lawmakers disagree.

The 2023 collapse of Credit Suisse remains the political backdrop to every major Swiss banking rule. The emergency takeover by UBS exposed the difficulty of managing a globally active bank whose balance sheet and foreign operations extend far beyond Switzerland’s domestic economy.

The capital bill is part of the reforms drafted after that crisis. Its objective is to make a future failure easier to contain by requiring UBS to place more genuine equity behind its foreign units. If losses hit those subsidiaries, a larger CET1 buffer would give the bank and supervisors more time to absorb them without relying as heavily on public support or emergency measures.

The debate has divided the Senate over how much protection Switzerland needs and how much international competitiveness it is prepared to sacrifice. Finance Minister Karin Keller-Sutter backed the government’s original proposal for 100% hard equity, while also urging support for the 90% option if necessary. Before the vote, she told senators: “We should not repeat the mistakes that were made in the wake of the 2008 financial crisis.”

UBS has opposed the Senate outcome, saying it is not a compromise and does not address the causes of the Credit Suisse collapse. The bank and its supporters have preferred the committee’s 50% CET1 model, with AT1 bonds permitted for the remaining portion.

The National Council will decide the next stage, with a referendum also possible. The Senate vote changes the political balance, but it does not yet impose a new capital requirement on UBS. The lower house must examine the bill, and differences between the two chambers could send the legislation through further rounds of parliamentary negotiation.

A decision could arrive in December 2026 at the earliest, although reporting points to 2027 as the more likely timetable. Even after Parliament agrees, implementation could take months or years. A referendum could add another delay and place the banking framework directly before Swiss voters.

The National Council will face three competing models already tested in the Senate debate. The current framework requires 45% core capital for foreign subsidiaries. The committee proposal would lift the CET1 share to 50% and permit AT1 bonds for the balance. The Senate’s preferred model sets the figure at 90%. The Federal Council’s original position sought 100% hard equity, but that option failed in the chamber.

For Switzerland, the outcome will shape the balance between financial stability and the international reach of its biggest bank. For UBS, the timetable will determine whether it adjusts through new equity, retained earnings, lower payouts or changes to its foreign business. The parliamentary process now moves to the chamber where the political arithmetic may look different.