STOCKS | Swiss Lawmakers Back Easing Bank Rules in Win for UBS

Influential lawmakers have backed a sharp reduction in UBS's proposed new capital requirements, handing the bank a major victory in its standoff with the Swiss government. According to Sina Finance, the compromise would cut in half the requirement for UBS to fully back its global operations with the most expensive form of equity capital, while the rest could be made up with debt. The proposal would still require UBS to fully support its foreign subsidiaries, but it would allow additional tier 1 bonds, or AT1, to cover up to half of the requirement instead of relying entirely on common equity tier 1 capital, or CET1. JPMorgan analysts had estimated that under the compromise UBS would need to raise only about $400 million in additional CET1 capital and issue about $16 billion in new AT1 bonds. The debate has become one of Switzerland's biggest financial policy battles in years, creating uncertainty for UBS and its shareholders as they wait for final clarity on bank capital rules. UBS has $1.7 trillion in assets, larger than the entire Swiss economy.