The Swiss Parliament advanced a compromise proposal allowing UBS to cover half of its foreign subsidiary capital requirements with Additional Tier 1 bonds instead of common equity, slashing its burden from roughly $20 billion to around $400 million. This victory for UBS stems directly from the emergency acquisition of Credit Suisse in March 2023, which prompted authorities to impose stricter capital rules for foreign subsidiaries. The upper house vote on this capital package is scheduled for August 31, 2026, though final legislation is not expected until late 2026 or into 2027. With AT1 bonds yielding around 7% versus an estimated 10% cost of equity, this compromise represents a substantial saving for the bank.
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