What happens to stocks if AI loses momentum?
Investing.com -- The Swiss government has proposed stringent new capital rules, mandating that banking giant UBS bolster its core capital by an additional $26 billion.
The move follows UBS’s acquisition of Credit Suisse in 2023.
The proposed measures also require UBS to fully capitalize its foreign units and could lead to a reduction in share buybacks.
The government’s statement on Friday indicated that "the rise in the going-concern requirement needs to be met with up to USD 26 billion of CET1 capital, to allow the AT1 bond holdings to be reduced by around USD 8 billion."
This effectively translates to a net requirement of $18 billion in new capital.
Following the announcement, UBS shares jumped, currently up around 3.5%.
The Swiss National Bank (SNB) expressed its support for the government’s proposals, stating that they will "significantly strengthen" UBS’s resilience.
The SNB believes the measures will reduce the likelihood of a systemically important bank like UBS facing financial distress and increase its capacity to stabilize itself in a crisis, thereby making a government bailout less likely.