UBS Group AG faces a 9% hit to earnings per share from a new Swiss capital reform plan, according to RBC analysts. The upper house of Switzerland’s parliament adopted a proposal requiring UBS to back 90% of its foreign units with CET1 capital, slightly less than the government’s original 100% proposal. RBC analysts Anke Reingen, Sherry Lin, and Susana Cruz called the outcome “close to the worst case” and noted the impact assumes UBS reduces outstanding AT1 bonds.

UBS opposes the rule, arguing it harms competitiveness and would require $16 billion in additional CET1 capital at its domestic unit. The bank is exploring alternatives, including potential combinations with other international banks, though RBC believes selling itself is unlikely before rules are finalized. A lower house committee will debate the reforms in October and November, with a full vote expected in December.

A separate proposal to set CET1 backing at 75% has also been floated. RBC analysts suggest a compromise between chambers is likely, but softer rules are improbable given the political composition.