Executive Summary

On 22 April 2026, the Federal Council adopted a revision of the Banking Act that requires systemically important banks to fully back their stakes in foreign subsidiaries with hard equity capital in the future. Previously, approximately half of these stakes could be financed through debt capital. Parliament will deliberate on the proposal starting summer 2026. At the same time, the Federal Council is adapting the Capital Adequacy Ordinance, which will come into force on 1 January 2027. The measure aims to strengthen financial stability and prevent future state interventions like those in the Credit Suisse case in 2023.

Persons

Topics

  • Banking regulation
  • Financial stability
  • Capital requirements
  • Too-big-to-fail framework

Clarus Lead

The reform responds directly to the Credit Suisse crisis of 2023, when insufficiently secured foreign stakes destabilized the bank and necessitated state intervention. The measure closes a regulatory gap that reduces the risk of bank collapses and taxpayer interventions. The solution is supported by the Swiss National Bank and FINMA and currently affects primarily UBS, which would thereby strengthen its hard core capital (CET1) by an estimated 20 billion US dollars.

Detailed Summary

The Federal Council views the new regulation as a targeted response to structural weaknesses revealed by the Credit Suisse crisis. At that time, losses in value of foreign subsidiaries reduced the capital ratios of the Swiss parent company from the first franc onwards – a mechanism that will cease to exist in the future. With full equity backing, systemically important banks can divest foreign subsidiaries during crisis phases without jeopardizing their capital ratios. This reduces the probability of liquidation or state rescue and shifts the risk from taxpayers to shareholders.

With a seven-year transition period, the Federal Council expects the UBS Group to achieve a hard core capital ratio of 15.5 percent – comparable to international competitors. The authorities reject alternative measures such as a general increase in capital requirements or the spin-off of US operations as disproportionate. The Capital Adequacy Ordinance was softened compared to the original proposal: instead of full backing of software and deferred tax assets with hard core capital, software now has a maximum three-year depreciation period (analogous to EU standards). This adjustment takes into account the results of public consultations and recommendations from parliamentary commissions. The Federal Council refrains from regulating deferred tax assets for now but reserves the right to reassess should the Banking Act measure prove insufficient.

Key Findings

  • Systemically important banks must henceforth fully back foreign subsidiaries with hard equity capital (instead of 50% as previously)
  • Measure aims to close a regulatory gap revealed by the Credit Suisse crisis
  • UBS would strengthen hard core capital by approximately 20 billion US dollars; seven-year transition period planned
  • Capital Adequacy Ordinance is designed more moderately; provisions on software and deferred tax assets partially reversed
  • Risk of state interventions decreases; financing costs should not be passed on to Swiss customers

Critical Questions

  1. Evidence/Data Quality: Are the estimates of UBS's CET1 capital gap (9 billion USD as of 1.1.2026, 20 billion USD strengthening potential) based on current balance sheet positions or scenarios? How sensitive are these figures to valuation changes in foreign subsidiaries?

  2. Conflicts of Interest: To what extent does the seven-year transition period take into account strategic incentives for UBS to optimize stakes or shift capital structures to meet the new requirements?

  3. Causality/Alternatives: The Federal Council rejects a general leverage ratio (15%) – on what empirical basis is the targeted measure assessed as more effective than broader capital increases?

  4. Feasibility: How is it ensured that financing costs for capital strengthening are not indirectly passed on to Swiss credit customers, for example through higher credit margins or fees?

  5. International Consistency: Why is the regulation on deferred tax assets not implemented for now, even though it is characterized as an "international exception" – what international standards apply here?

  6. Implementation Risks: What control mechanisms ensure that systemically important banks do not circumvent the new capital requirements through balance sheet management (e.g., revaluation of foreign stakes)?

Source Directory

Primary Source: Federal Council – Message on the Revision of the Banking Act (22 April 2026) – https://www.news.admin.ch/de/newnsb/_9e8qd5sXEzLww7dK3H_9

Supplementary Sources:

  • Swiss National Bank (SNB)
  • Swiss Financial Market Supervisory Authority (FINMA)
  • Parliamentary Investigation Commission (PUK) Credit Suisse

Verification Status: ✓ 22.04.2026

This text was created with the assistance of an AI model. Editorial Responsibility: clarus.news | Fact-Checking: 22.04.2026