The Swiss National Bank (SNB) published its annual financial stability report on Thursday, stating that UBS already possesses sufficient capital to meet the government’s proposed requirement for full capital backing of its foreign subsidiaries. UBS immediately rejected the assessment as “misleading”, arguing the central bank’s analysis distorts the operational impact of the pending regulations. The public dispute marks a sharp escalation in the debate over how to fortify the country’s last global bank three years after the forced takeover of Credit Suisse.

The reform package, drafted by the government in Bern and known informally as “Lex UBS”, would compel the bank to hold common equity tier 1 (CET1) capital equal to 100 percent of the value of each foreign unit, up from the current 60 percent. The SNB, alongside the financial regulator Finma and the International Monetary Fund, has consistently backed full capitalisation. Its report calculated that UBS’s eligible CET1 capital exceeds fully phased-in requirements by $13 billion, and with $9 billion in reserves at its Swiss entity, the bank already meets the proposed standard. UBS counters that the cumulative impact would require an additional $20 billion in CET1 capital, severely damaging its business model and competitive position both domestically and internationally.

The clash is now moving through parliament, where UBS lobbyists are gaining influence and lawmakers are expected to soften the government’s proposals. The responsible committee reconvenes in August and may formally recommend easing the requirements. In a parallel development, Julius Baer is advancing towards normalising operations after more than two years of fallout from losses tied to Austrian property magnate Rene Benko. The Zurich-based wealth manager is preparing to lift a self-imposed ban on accepting politically exposed persons as clients, a move that signals the Finma investigation into risk-control failures is in its final stages. Julius Baer shares rose 2.86 percent on the news.

The Finma probe into Julius Baer, triggered by $700 million in loan losses to Benko’s companies, is expected to conclude formally in the second half of 2025, which would allow the bank to resume share buybacks. For UBS, the parliamentary process is set to extend into next year, with the SNB and Finma continuing to advocate for full capital backing. UBS has previously raised the possibility of relocating its headquarters if the final rules prove too onerous. The next concrete milestone is the August committee session, where the scope of any legislative softening will begin to take shape.