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A group of Swiss lawmakers has put forward a compromise to soften the government’s proposed capital rules for UBS, which would require the bank to fully capitalize its foreign subsidiaries, up from 60% today. This proposal would have forced the bank to raise an estimated $24bn in CET1 capital. The new proposal would allow UBS to meet up to half of that requirement using AT1 instruments, significantly reducing the capital burden while still supporting Switzerland’s aim of maintaining the world’s strictest regulatory framework. Lawmakers emphasized that although UBS should be held to high standards as the country’s sole global bank, rules must not diverge so far from those in the EU, UK, US and Asia that the bank’s competitiveness is harmed. The plan also suggests capping investment banking activities at 30% of RWAs. UBS welcomed the compromise as more balanced than the government’s original plan, reiterating its call for proportionate, internationally aligned regulation.
UBS bonds traded stable with its 6.6% Perp at 101.5, yielding 6.2%.
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