BRUSSELS (dpa-AFX) - Swiss banking major UBS Group AG (UBS) said Friday that it supports most regulatory proposals issued by the Swiss Federal Council but strongly opposes the extreme increase in capital requirements, arguing that they lack proportionality and international alignment.
The new proposals would require UBS to fully deduct investments in foreign subsidiaries, deferred tax assets on temporary differences, and capitalized software from its CET1 capital, alongside increased prudential valuation adjustments.
UBS noted that the changes would force the company to hold an estimated additional $24 billion in CET1 capital, primarily due to a $23 billion deduction of its foreign subsidiaries' investments. At the group level, the CET1 capital ratio would rise to 19%, but regulatory measures misaligned with global standards could reduce it to around 17%, underrepresenting UBS's financial strength.
The capital requirement increase would come on top of $18 billion already needed following UBS's acquisition of Credit Suisse-bringing the total additional CET1 capital required to $42 billion. Despite these proposed regulations, UBS Group AG maintains its target of a 15% underlying return on CET1 capital and a cost/income ratio below 70% by the end of 2026.
UBS reaffirms its 2025 capital return plans, including a 10% dividend increase and share repurchases of up to $3 billion, contingent on maintaining its CET1 capital ratio target of 14%. Future capital return goals for 2026 will be disclosed with its fourth-quarter and full-year financial results for 2025.
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