UBS warns tougher Swiss capital rules could force major business changes

UBS chairman Colm Kelleher warned shareholders that tougher Swiss capital rules could force the bank into major strategic choices, from slower growth to a possible restructuring of parts of its business, as Bern weighs how to prevent another Credit Suisse-style disaster without weakening its biggest lender.

Speaking at UBS’s annual meeting in Basel, Kelleher said the proposed rules pose a serious threat to the bank’s business model while offering little meaningful improvement in financial stability. He said UBS would have to evaluate appropriate measures if the proposals are adopted in their strongest form, a signal that the debate over capital requirements has moved beyond lobbying and into the realm of real operating decisions.

Those decisions could reach deep into UBS’s balance sheet and strategy. Higher capital demands could make asset sales, a more conservative balance-sheet posture or slower expansion more likely, especially if the bank is required to hold more capital against its foreign subsidiaries. Kelleher said UBS does not want to leave Switzerland and wants to remain headquartered there, but he also made clear that the bank intends to keep its growth ambitions in Asia and the United States.

The pressure comes after the Swiss government’s June 2025 proposal to tighten capital rules in the aftermath of Credit Suisse’s 2023 collapse and emergency state-backed takeover by UBS. UBS has said the package could require about $24 billion in additional common equity tier 1 capital on a pro forma basis, including roughly $23 billion tied to the full deduction of investments in foreign subsidiaries, on top of about $18 billion of capital the bank already expected to need because of the Credit Suisse acquisition.

Swiss regulators argue that tougher rules would make UBS safer. Finance minister Karin Keller-Sutter has said the bank would become more stable and attractive, while growth abroad would simply become more expensive. UBS has pushed back, saying it supports most regulatory ideas in principle but strongly opposes what it calls an extreme capital increase that is neither proportionate nor internationally aligned.

The stakes are magnified by UBS’s size. After absorbing Credit Suisse, the bank’s total assets reached about 1.7 trillion francs, roughly twice Switzerland’s gross domestic product. That scale has intensified pressure on regulators to ensure the lender can absorb shocks, but it has also raised fears that overly strict rules could put UBS at a disadvantage against U.S. rivals and other global wealth managers.

Kelleher also linked the issue to shareholder returns. UBS said it still targets $3 billion in share buybacks in 2025, but the chairman said the final level of repurchases will depend on the regulatory outcome. At the same meeting, UBS proposed an ordinary dividend of $1.10 per share for the 2025 financial year, and Kelleher was standing for re-election as chairman. He also praised chief executive Sergio Ermotti, saying the Credit Suisse integration was in its last mile and would soon give way to a focus on higher returns and growth.