The proposal by the cross-party group is supported, according to Neue Zürcher Zeitung (NZZ), by FDP Council of States member Thierry Burkart, SVP National Councillor Thomas Matter, Centre Party Council of States member Erich Ettlin, and GLP National Councillor Tiana Moser.

Under the Federal Council’s proposal, the major bank would have to increase its capital by a total of around 42 billion dollar. UBS and its CEO Sergio Ermotti argue that this would put the bank at a competitive disadvantage compared with international rivals.

The compromise proposal also предусматривает that the global bank must fully capitalise its foreign subsidiaries. However, in this capital backing not only common equity would be recognised, but also AT1 bonds, up to a share of 50 percent. This is intended to make capital accumulation cheaper for UBS.

In addition, the bank should still be allowed, under certain conditions, to count software or deferred tax assets as capital. The Federal Council intends to abolish both.

Limiting Investment Banking

The proposal also includes a limitation on investment banking. In future, this business area should not account for more than 30 percent of the bank’s balance sheet. «Swiss banks have cumulatively not made any money in the US over the past fifty years, primarily because of investment banking,» Matter said. Limiting this segment to 30 percent of the balance sheet would be in the interests of taxpayers.

«We want the highest possible level of security for the last remaining global bank in Switzerland, but we also have to take into account the competitiveness of Switzerland as a financial centre,» Burkart is quoted as saying by the newspaper.

UBS is also quoted as responding that it has taken note of the proposal. «The proposal now presented goes in a more constructive direction than the Federal Council’s extreme variant.»

Initial exploratory talks have reportedly been held with Finance Minister Karin Keller-Sutter. Next, the parliamentarians plan to discuss the compromise proposal within their respective parties.

The consultation on the adjustment of the Capital Adequacy Ordinance was completed in September.