Following the publication of the proposals of the Federal Council on banking stability, UBS issued a statement.
UBS says it first supports most of the regulatory proposals published today by the Swiss Federal Council. However, UBS strongly disagrees with the extreme increase in the proposed capital requirements. According to the bank, these changes would lead to capital requirements that are neither proportional nor internationally aligned.
Proposals would require UBS to fully remove investment in foreign affiliates from CET1 Capital. UBS would also need to fully remove deferred tax data on temporary differences (TD DTA) and capitalized software from CET1 Capital. In addition, proposals would require increased valuation adjustments (PVAS).
Based on the published financial information from the first quarter of 2025 and since UBS AG’s CET1 capital index will be required from 12.5% and 13%, UBS AG will require additional estimated CET1 capital of approximately $ 24 billion on a pre-format basis. subsidiaries. These Pro-Forma elements also reflect previously announced expected capital repatriation of approximately 5 billion USD.
The CET1 Growth Capital of approximately $ 24 billion required on UBS AG would lead to CET1 capital index at UBS AG level (consolidated) level of about 19%. At the group level, the proposed measures associated with TD DTA, capitalized software and PVA will eliminate capital recognition for these elements in a way that is aligned with international standards. This will reduce the CET1 capital ratio in the UBS Group to about 17%, underpinning the UBS capital.
The $ 24 billion additional chapter would be in addition to the previously contagious capital of approximately 18 billion USD UBS will have to keep as a result of the acquisition of Credit Suisse in order to meet existing regulations. This includes about $ 9 billion to remove regulatory concessions granted to Credit Suisse and around $ 9 billion to meet the current progressive requirements due to the magnitude of the combined business.
As a result, UBS should keep about $ 42 billion in additional CET1 funds in total.
As none of the regulatory changes are expected to come into force before 2027, UBS Group AG retains its goal of achieving an underlying CET1 capital rendering of about 15% and an underlying cost/income ratio <70% by the end of 2026 (both exit).
UBS also confirmed its capital return intentions for 2025. These include an increase of about 10% in the usual dividend per share and the acquisition of up to $ 2 billion in the second half of the year, for a total of up to $ 3 billion. This plan is still subject to a UBS group that maintains a CET1 capital target of about 14% and achieving its financial goals and is in line with the previously announced UBS plans and the conservative approach.
UBS says it will evaluate appropriate measures, if possible, to address the negative effects of extreme regulations on its shareholders.