Swiss Government Orders UBS to Set Aside $20 Billion in Additional Reserves

Swiss authorities ordered UBS on Wednesday to set aside an additional $20 billion in safety reserves. The directive is part of efforts to strengthen regulations and avoid another taxpayer-funded bailout similar to the 2023 Credit Suisse collapse. The bank must maintain sufficient cash to fully fund its foreign subsidiaries, an increase from the current 60% requirement.

The proposal requires UBS to back all overseas investments with high-quality reserves in Switzerland to protect the domestic economy from risks associated with the bank's global operations. Swiss finance minister Karin Keller-Sutter stated that the bank's balance sheet is at least 1.5 times larger than the Swiss economy.

She added that the new rules would not prompt UBS to relocate its headquarters.

The government made concessions, including delaying implementation until January 2027 and removing requirements for reserves on items such as software and deferred tax breaks. UBS stated that the package lacks international alignment and disregards concerns from most consultation respondents.

The bank warned that the changes could affect jobs and investment. UBS CEO Sergio Ermotti leads the company, which has been in discussions with authorities over these protections since the Credit Suisse rescue three years ago. Chairman Colm Kelleher told shareholders at the annual meeting last week that the bank would review the rules to minimize negative effects while planning to remain in Switzerland.

He noted that key business decisions may become unavoidable.

The rules stem from commitments made after the Credit Suisse incident to prevent any single bank from threatening the national economy. A study commissioned by UBS estimated that the changes could reduce the Swiss economy by up to 3.9% over a decade.

Lawmakers are scheduled to consider the foreign-operations rule starting May 4, with potential adjustments possible. Karin Keller-Sutter said that significant retreats from the proposal would require revisiting the concessions. The Post reported in September that UBS leadership had discussed with senior Trump administration officials the possibility of shifting headquarters to the U.S. Such a move could result in stricter capital requirements for its Swiss business and loss of its safe-haven status.

“I see absolutely no reason in this regulation for a bank like UBS to leave Switzerland. None at all.”