The Swiss finance minister Karin Keller-Sutter has criticised plans to water down new UBS capital requirements, according to the Financial Times.

UBS had been expected to fully capitalise its foreign subsidiaries, under Swiss government reforms to prevent a repeat of the government bailout of Credit Suisse, which UBS acquired following its near collapse in 2023.

Under initial proposals, UBS would be required to hold an additional $20 billion in additional cent Common Equity Tier 1 (CET1), but recent reporting has suggested this could be watered down to $12 billion or less.

The Financial Times reported that the Swiss parliament would water down these requirements and this was reaffirmed in July by Reuters reports that the Swiss parliament was softening capital requirements to 50 to 80 per cent.

On Monday, the Swiss parliament’s economic affairs and taxation committee officially proposed changes to the requirements which would allow UBS to cover half of its capitalisation with ​Additional Tier 1 capital. This is a cheaper form of debt that includes hybrid debt instruments.

Under the new proposals, UBS would have to hold around $13 billion in extra capital.

Keller-Sutter said the changes have been proposed because “lobbying in parliament is so strong”, per the Financial Times.

Reuters separately reported that Keller-Sutter pointed to an assessment by the Swiss Financial Market Supervisory Authority, which suggested that the changes were impractical and could introduce greater legal uncertainty to the bank’s operations.

“It does not improve the situation, quite the opposite,” she added.

Reuters reported the committee as having stated: “The committee views its proposal as a compromise between the (government) proposal and the interests of the cantons, the ​economy and the bank most ​affected, UBS.”

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