UBS · UBS Group AG

UBS issued this ad hoc announcement responding to the Swiss Federal Council's publication of the final Capital Adequacy Ordinance (CAO) and proposal for Banking Act amendments on April 22, 2026. The CAO mandates accelerated amortization of capitalized software to a maximum of three years for capital purposes, irrespective of economic life, and increases prudential valuation adjustments for assets and liabilities with valuation uncertainty, leading to a net CET1 capital reduction of USD 4 billion at the UBS Group consolidated level, equivalent to a 0.8 percentage point drop in the CET1 ratio. These changes phase in with valuation adjustments effective January 1, 2027, and software treatment by January 1, 2029. Deferred tax assets treatment remains unchanged and internationally aligned, while AT1 instrument adjustments are paused pending global developments.

Separately, the foreign participations proposal, now entering parliamentary review, requires full deduction of investments in foreign subsidiaries from UBS AG's standalone CET1 capital, phased over seven years from 65% to 100%. This demands approximately USD 20 billion additional CET1 at UBS AG, combining with the USD 2 billion CAO impact for a total USD 22 billion incremental requirement. Layered atop the USD 15 billion extra capital tied to the Credit Suisse acquisition (USD 9 billion for removing concessions and USD 6 billion for size/market share adjustments), UBS faces a total additional CET1 burden of USD 37 billion, with annual capital costs around USD 3 billion. Using December 31, 2025 balance sheet data and prior disclosed starting CET1 ratios of 12.5% for UBS AG and 14.0% for Group, this implies a de facto minimum Group CET1 ratio of 17.6%, which UBS views as underrepresenting its capital strength versus peers and criticizes the government's 15.5% pro-forma as misleading.

UBS strongly opposes the package as extreme, misaligned internationally, and dismissive of consultation feedback, warning of severe Swiss economic repercussions including up to CHF 34 billion in cumulative GDP losses over ten years from higher borrowing costs and reduced credit supply, per BAK Economics. Despite no changes effective before 2027, UBS reaffirms its 2026 targets of 15% underlying return on CET1 capital and sub-70% cost/income ratio on an exit rate basis, alongside commitment to planned capital returns. The firm will engage parliament with facts, evaluate shareholder protections, and maintain its global wealth management and Swiss banking model under already stringent capital rules.