UBS supports in principle most of the regulatory proposals the Swiss Federal Council published today.1 However, UBS strongly disagrees with the extreme increase in capital requirements that has been proposed. These changes would result in capital requirements that are neither proportionate nor internationally aligned.
The proposals would require UBS to fully deduct investments in foreign subsidiaries from its CET1 capital. UBS would also need to fully deduct deferred tax assets on temporary differences (TD DTAs) and capitalized software from its CET1 capital. Furthermore, the proposals would necessitate an increase in prudential valuation adjustments (PVAs).
Based on published financial information from the first quarter of 2025, and given UBS AG’s target CET1 capital ratio of between 12.5% and 13%, UBS AG would be required to hold additional estimated CET1 capital of around USD 24bn on a pro-forma basis, if the recommendations are implemented as proposed. This includes around USD 23bn related to the full deduction of UBS AG’s investments in foreign subsidiaries. These pro-forma figures also reflect previously announced expected capital repatriations of around USD 5bn.
The incremental CET1 capital of around USD 24bn required at UBS AG would result in a CET1 capital ratio at the UBS Group AG (consolidated) level of around 19%. At Group level, the proposed measures related to TD DTAs, capitalized software and PVAs would eliminate capital recognition for these items in a manner misaligned with international standards. This would reduce the CET1 capital ratio at UBS Group to around 17%, underrepresenting UBS’s capital strength. Further information is available at www.ubs.com/presentations.
The additional capital of USD 24bn would be in addition to the previously communicated incremental capital of around USD 18bn UBS will have to hold as a result of the acquisition of Credit Suisse in order to meet existing regulations. This includes about USD 9bn to remove the regulatory concessions granted to Credit Suisse and around USD 9bn to meet the current progressive requirements due to the enlarged size of the combined business.As a result, UBS would be required to hold about USD 42bn in additional CET1 capital in total.
As none of the regulatory changes are expected to become effective before 2027, UBS Group AG maintains its target of achieving an underlying return on CET1 capital of around 15% and an underlying cost/income ratio of <70% by the end of 2026 (both on an exit rate basis). UBS will provide an update on its longer-term returns targets when there is more clarity on the timing of potential changes and when the likely final outcome becomes more visible.
UBS also reaffirms its capital return intentions for 2025. These include accruing for an increase of around 10% in the ordinary dividend per share and repurchasing up to USD 2bn of shares in the second half of the year, for a total of up to USD 3bn. This plan continues to be subject to UBS Group maintaining a CET1 capital ratio target of around 14% and achieving its financial targets and is consistent with UBS’s previously communicated plans and conservative approach. UBS will communicate its 2026 capital returns ambitions with its fourth quarter and full-year financial results for 2025.
UBS will actively engage in the consultation process with all relevant stakeholders and contribute to evaluating alternatives and effective solutions that lead to regulatory change proposals with a reasonable cost/benefit outcome. UBS will also evaluate appropriate measures, if and where possible, to address the negative effects that extreme regulations would have on its shareholders.
As the largest truly global wealth manager and leading bank in Switzerland, with competitive global investment bank and asset management capabilities, UBS brings financial stability, expertise, economic benefits and international know-how to its home country and to all its clients globally. UBS remains committed to its diversified business model and its unique regional footprint as well as successfully completing the integration of Credit Suisse in the best interest of all stakeholders.
UBS is reviewing the substantial amount of information published today and will share its further assessment in due course.
