UBS Group Drops 3.11% on Swiss Capital Rule Fears

UBS Group's stock price dropped 3.11% in pre-market trading on May 20, 2025, amid concerns over potential regulatory changes in Switzerland.

UBS Group is facing a significant regulatory challenge as the Swiss government proposes a new law that could require the bank to maintain an additional $250 billion in capital. This proposal aims to enhance the bank's ability to cover losses from its overseas subsidiaries, increasing the coverage from the current 60% to 100%. The draft law, expected to be unveiled on June 6, 2025, is part of a broader effort to strengthen Swiss banking regulations following the collapse of Credit Suisse in 2023. UBS, which acquired Credit Suisse as part of a government-backed rescue plan, is now subject to higher capital requirements due to its expanded size and complexity.

UBS has been actively lobbying against the proposed law, arguing that it would put the bank at a competitive disadvantage globally. However, the Swiss government remains firm in its stance, prioritizing financial stability over potential economic disadvantages. The legislative process is expected to be lengthy, with consultations and parliamentary debates scheduled over the next few years. The law could potentially come into effect by 2029, although technical rules may be implemented sooner. The uncertainty surrounding the new capital requirements has already put pressure on UBS's stock price, with investors concerned about the potential impact on the bank's cash returns and acquisition plans.