Swiss Finance Minister Karin Keller-Sutter has criticized lawmakers' efforts to weaken UBS capital requirements, intensifying political debate over the nation's largest bank. On Tuesday, Keller-Sutter argued a parliamentary committee's compromise plan favors UBS over taxpayers, raising the possibility of a public referendum. The committee proposed allowing UBS to use cheaper AT1 debt to cover half of its foreign subsidiary capitalisation, significantly reducing the $20 billion burden proposed by the government in April.

While the government claims reforms are necessary to prevent a Credit Suisse-style collapse, UBS has called the measures excessive, warning they could damage international competitiveness and potentially prompt a headquarters move. UBS estimates the committee's proposal would require about $13 billion in additional tier one capital, compared to $20 billion under the original plan. Anke Reingen of RBC Capital Markets described the compromise as important for setting a parliamentary path forward.

The reforms must still be accepted by a majority of Swiss lawmakers debating the changes later this month.