Home / Business and Economy / UBS eyes hundreds of millions in savings
UBS eyes hundreds of millions in savings
15 Sep
Summary
- UBS could save hundreds of millions annually with new bond rules.
- Parliamentary committee proposed a compromise on AT1 bond usage.
- Alternative AT1 use is cheaper than government's CET1 capital plan.
A potential overhaul of Swiss banking laws could see UBS save hundreds of millions of dollars annually. Investors suggest that an alternative proposal regarding the use of Additional Tier 1 (AT1) bonds, currently under consideration by parliament, offers significant cost advantages.
The proposal, which emerged from a parliamentary committee, would allow UBS to utilize $13 billion in AT1 capital. This approach contrasts with the government's initial plan, which mandated UBS to hold approximately $20 billion more in Common Equity Tier 1 (CET1) capital for its foreign units.
While the parliamentary committee's plan tightens existing rules for AT1 bonds, it is considered less costly than the government's approach. Holding CET1 capital would imply a cost of around 9% to 10%, whereas using AT1 debt could save UBS hundreds of millions of dollars each year.
This compromise aims to provide greater clarity on AT1 instrument operations and align Swiss regulations more closely with European Union and British standards. The proposal faces debate in the Swiss upper house and potentially a tougher reception in the lower chamber, with a final decision on capital rules expected later in 2027.
