Switzerland’s Federal Council unveiled final capital reforms for UBS on Wednesday, two years after regulatory disputes with UBS began following the Credit Suisse collapse. The government claims the package is “more moderate than planned,” but UBS rejects that framing, calling the rules “extreme” and lacking international alignment. The core $20bn capital demand for foreign subsidiaries remains intact.

Officials scrapped earlier proposals to bar deferred tax assets and in-house software from CET1 capital, which would have cost $11bn. Most respondents opposed the initial changes. The revised rules cut that hit to $4bn, with a three-year phase-in for software assets aligned with EU rules. These ordinance measures take effect via government decree, so parliament cannot ease this portion further.

The unyielding core demand requires $20bn in additional CET1 capital to fully back UBS’s foreign subsidiaries, up from the current 60% requirement. A cross-party compromise using AT1 debt would cut the CET1 need to $400mn, but the government insists only CET1 is effective. Parliament will debate the draft law, with Citi’s Coombs warning the rules could force UBS to exit some international markets.