A committee of Swiss parliamentarians recently voted for a compromise plan that allows UBS to meet half of the new capital requirements by issuing bonds, while the other half needs to be completed by issuing additional shares. This means that UBS can drastically reduce funding costs, and the market sees it as a phased victory. However, the plan still requires a final vote by both houses of the Swiss Parliament, and the dust has not yet settled. After UBS's emergency acquisition of Credit Suisse in 2023, the Swiss government began revising the capital rules for systemically important banks. It is proposed to require UBS to hold far higher capital than the current one to prevent its major US and UK subsidiaries from crashing down the entire group. UBS, on the other hand, resolutely opposes the increase, believing that Credit Suisse's collapse was due to a failed business model and weak governance rather than insufficient capital. The AT1 bond that UBS plans to use provides additional loss buffer for the bank, but disputes about such instruments continue — the Swiss authorities directly wrote down the $17 billion AT1 bond to zero when bailing out Credit Suisse, and the holders suffered huge losses, and many lawsuits have not yet been settled.

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