ZURICH. The heaviest lobbying campaign of the autumn session has gone public. Five of Switzerland’s most powerful business associations, economiesuisse, the small business umbrella, the manufacturers, the multinationals and the pharma lobby, have written to federal lawmakers warning that the government’s bank capital package risks becoming what their letter calls excessive regulation, drawn up for one bank and paid for by the whole economy. The letter, dated 18 September, landed as the parliamentary committees prepare to vote on the first of its central planks.
The package exists because of 2023. The emergency absorption of Credit Suisse left Switzerland with a single global bank whose balance sheet is roughly twice the size of the national economy, and a government determination that the taxpayer should never again underwrite a rescue over a weekend. Bern’s answer, now working through parliament, would require UBS to back its foreign subsidiaries with far more core capital, a demand the finance ministry calculates at around $20 billion in additional CET1, the highest quality capital there is.
UBS answered the letter with a document of its own on Monday: a ten point position paper defending the compromise crafted by the Senate’s economic affairs committee, known by its initials WAK-S. That model would let the bank meet half of the new requirement with AT1 bonds, the contingent convertible debt that converts to equity in a crisis, rather than with pure equity alone. The paper argues AT1 is an established, internationally aligned instrument, that the market can absorb the additional issuance, and that the bonds’ trigger mechanisms would have made Credit Suisse’s deterioration visible earlier, through regulatory filters and cancelled bonuses.
Then it drops the diplomatic language. A requirement to back 90 per cent of foreign subsidiaries with CET1, the paper says, is not a compromise at all, and would significantly damage the competitiveness of Switzerland’s only remaining global bank. The sentence is aimed at the hardest line under discussion in Bern, and everyone in the debate recognises its target.
The business letter makes the macro version of the same case. Capital held is capital not lent, the associations argue, and a rulebook that goes far beyond international standards would handicap the Swiss financial centre against rivals in London, New York and Singapore while raising costs for the exporters and suppliers who bank with UBS because nobody else can serve them at scale. The government’s counterargument is equally simple: the cost of capital is visible and modest, the cost of another collapse is neither.
The politics are genuinely split, and not along the usual lines. The centre right is divided between its business wing and its law and order instinct toward a bank that needed rescuing. The left wants more, not less. The committee votes expected in the coming days will show whether the WAK-S fifty fifty model holds as the centre of gravity, or whether the chamber debates this winter reopen the question of how much equity is enough.
What is not in dispute is the stake. UBS is the last Swiss institution with a global investment bank, the largest wealth manager on earth, and the employer and lender of first resort for a measurable slice of the economy. The letter writers and the regulators want the same thing, a bank that never needs the state again. They disagree, by about twenty billion dollars, on what that costs. Parliament now gets to price the argument.