UBS Group (UBSG) investor relations material

Key messages and regulatory context

• Proposed Swiss capital measures are criticized as excessive, disproportionate, and misaligned with international standards, combining the strictest elements from global peers and deviating from Basel norms.

• The changes would require UBS to hold up to USD 42 billion (CHF 24 billion) in additional CET1 capital, eliminating $11 billion of CET1 at group level and reducing the CET1 ratio by about 2 percentage points, making requirements up to 50% higher than in the EU, UK, and USA.

• Switzerland already has one of the strictest capital regimes globally, with minimum requirements well above international peers.

• The proposals are seen as lacking solid analytical basis or cost-benefit analysis and risk undermining competitiveness and imposing significant costs on the Swiss economy.

• UBS supports targeted, proportionate, and internationally aligned regulation, endorsing improvements if they do not unduly restrict operational flexibility.

Critique of specific ordinance proposals

• Full deduction of capitalized software and deferred tax assets from CET1 capital is viewed as unnecessary, unprecedented internationally, and would destroy about $11 billion of capital at group level.

• Stricter prudential valuation adjustments (PVAs) are seen as unjustified and more conservative than most foreign jurisdictions, inconsistently aligned with EBA standards.

• The approach to AT1 capital instruments, including automatic suspension of coupon payments after four quarters of losses, is criticized as pro-cyclical, stigmatizing, and deviating from global norms.

• The approach to foreign subsidiaries would require excessive capital, far exceeding international standards and potentially provoking regulatory fragmentation.

• Measures do not differentiate between going concern capital and loss-absorbing capacity, disregarding $20 billion in AT1 and $100 billion in loss-absorbing debt.

Lessons from Credit Suisse and regulatory effectiveness

• Credit Suisse's failure was due to unsustainable strategy, poor culture, and weak risk management, not capital inadequacy.

• Expert reports confirm Credit Suisse was resolvable, though at higher cost and risk than the UBS-led solution.

• UBS's rescue of Credit Suisse demonstrates the effectiveness of the Swiss capital framework if strictly applied.

• Regulatory concessions allowed prolonged inaction at Credit Suisse.

• The proposals are not justified by lessons from the Credit Suisse crisis.