UBS Group Drops 3.32% Amid New Swiss Capital Rules

UBS Group's stock price dropped 3.32% in pre-market trading on May 20, 2025, as investors reacted to the potential impact of new regulatory requirements.

UBS Group is facing significant regulatory pressure from the Swiss government, which is proposing a 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 in the wake of the 2023 Credit Suisse collapse.

UBS has been actively lobbying against this requirement, arguing that it would put the bank at a competitive disadvantage globally. However, the Swiss government remains steadfast in its stance, citing the need for stronger oversight to prevent future financial crises. The proposed law is expected to undergo extensive consultation and legislative processes, with a potential implementation date as late as 2029.

The uncertainty surrounding these regulatory changes 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. The bank is now considering various strategies, including the possibility of relocating its headquarters outside of Switzerland, to mitigate the effects of the new regulations.