(Alliance News) - UBS Group AG has responded to new banking requirements proposed by the Swiss Federal Council in response to the 2023 Credit Suisse buyout.

The Federal Council on Friday said it would require banks to strengthen its capital base in overseas subsidiaries to avoid a potential collapse.

New rules include "stricter capital requirements for systemically important banks with foreign subsidiaries (and) additional requirements on the recovery and resolution of systemically important banks," the government said.

While the rules apply to all Swiss banks, only UBS is affected, as the country's other three top banks have no significant activities abroad, AFP noted.

"The package of measures is intended to strengthen the Swiss financial centre and reduce the risks for the state, taxpayers and the economy," the government said.

The decision aims to "draws lessons from (the) Credit Suisse crisis", which saw the bank bought out by UBS in 2023.

A parliamentary commission of inquiry in December blamed mismanagement for the bank's implosion.

While UBS said it "supports in principle" most of the proposals, it "strongly disagrees with the extreme increase in capital requirements".

"These changes would result in capital requirements that are neither proportionate nor internationally aligned," the bank added.

Under the new rules, UBS would be required to hold up to USD26 billion more in core capital, bringing its CET1 ratio of 14.3% up to 17%, higher than global counterparts JPMorgan, Morgan Stanley and Goldman Sachs, Reuters noted.

The proposals would require UBS to fully deduct investments in foreign subsidiaries from its CET1 capital; fully deduct deferred tax assets on temporary differences and capitalized software from its CET1 capital; and necessitate an increase in prudential valuation adjustments.

The measures allow regulators to apply targeted sanctions on managers and cancel bonuses.

UBS shares closed up 3.8% at CHF27.88 in Zurich on Friday.

By Aidan Lane, Alliance News reporter

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