UBS Group AG (NYSE:UBS) and other systemically relevant banks are poised to face tougher capital requirements as the Swiss government pushes for reforms a year after the collapse of Credit Suisse, according to a 209-page report on banking stability issued on Wednesday.
Shares of the Swiss lender (UBS) slid 3.4% in late morning trading in the U.S.
In addition to holding substantially more capital against their foreign arms, the Federal Council proposed increasing in bank-specific capital levels to better prepare for future risks.
“The quantitative and qualitative capital requirements for systemically important banks should be tightened in a targeted way and supplemented with a forward-looking component,” the government said in a summary of its proposals.
In response to the Switzerland’s worst financial crisis in more than a decade, UBS (UBS) will face a “substantial” increase in capital requirements, the document said, “especially if UBS were to retain its current size and structure, or even grow.”
Under the current requirements, the UBS (UBS) parent bank is required to provide capital backing of 60% for participations in a foreign subsidiary.