SNB backs tougher UBS capital rules, says the bank already holds enough reserves to meet them
The Swiss National Bank said in its annual stability review that UBS has sufficient capital to satisfy proposed stricter rules, lending support to the government’s push for full equity backing of foreign subsidiaries.
Swiss banks remain robust amid tighter conditions
The Swiss National Bank’s financial stability report, published on Thursday, paints a picture of a resilient banking sector. The SNB said that Swiss banks are well positioned to cope with the current macroeconomic and financial challenges, citing solid capital buffers and profitability. Credit growth has accelerated and remains robust, the central bank noted, and the introduction of Basel III final rules in January 2025 did not impair lending.
The Swiss banking sector is well positioned to withstand the current challenging macroeconomic and financial environment.
The assessment comes as authorities continue to reshape regulation after the 2023 collapse of Credit Suisse and its takeover by UBS, which made the combined entity the only remaining global systemically important bank in Switzerland.
UBS already meets proposed capital demands, SNB says
The most closely watched part of the report concerns UBS. The government, led by Finance Minister Karin Keller-Sutter, wants UBS to fully back its foreign subsidiaries with common equity Tier 1 capital. The SNB explicitly supported this approach, calling it “targeted and proportionate” and arguing that the current partial capitalization leaves the parent vulnerable to losses on foreign units and limits its ability to stabilise in a crisis.
The central bank also released pro forma calculations, including reserves, that show UBS already has enough capital to meet the proposed requirements.
According to the pro forma calculations of the authorities and including reserves, UBS already has sufficient capital to meet the proposed requirements.
UBS itself disagrees with the proportionality of the measures, particularly the full equity backing of overseas subsidiaries, and insists that internationally competitive regulation must be maintained.
Domestic banks: slight profit dip, but most can weather shocks
The report also examined domestically oriented banks. Their profitability fell marginally in 2025 because of lower interest income and narrower margins. Stress tests nevertheless indicated that most of these banks could withstand adverse scenarios thanks to their capital buffers. The SNB warned that these banks are especially sensitive to a significant rise in interest rates combined with price corrections in the Swiss real estate market, and noted that the sectoral countercyclical capital buffer is currently set at the legal maximum of 2.5%.
Among the three domestically oriented systemically important banks, Raiffeisen Group saw profitability decline, while PostFinance and Zürcher Kantonalbank improved. Capitalisation ratios at Raiffeisen and ZKB were well above regulatory requirements; PostFinance’s leverage ratio, however, only just met the threshold.
Lessons from Credit Suisse and institutional backing
The push for full equity backing of foreign subsidiaries reflects lessons from the Credit Suisse crisis. SNB Vice President Antoine Martin explained that the weakness in the current regime became evident during that episode, when selling off foreign units would have further eroded Credit Suisse’s core capital ratio. The International Monetary Fund also backed the government’s proposals last week.
