The Federal Council is proposing to fully deduct foreign participations from core capital. However, this extreme option significantly strengthens Swiss Finish, is unheard of internationally, and weakens the competitiveness of the Swiss financial and industrial center. For these reasons, Swissbanking (Swiss Bankers Association) rejects this regulation.
In its position on the amendment to the Banking Act regarding the capital requirements of foreign subsidiaries/participations (Measure 15), Swissbanking supports the goal of strengthening systemic stability and, consequently, further consolidating trust in the Swiss financial center.
However, the association categorically rejects the proposal to fully deduct foreign holdings from core capital (CET1) and to require 100% capital coverage for foreign subsidiaries. The Federal Council's proposal thus opts for an extreme variant that further strengthens Swiss Finish, significantly differentiates itself internationally, and further weakens the competitiveness of the Swiss financial and industrial center.
Such a weakening would have consequences not only for financial policy, but also for the labor market: Swissbanking assesses these measures from the perspective of banks as employers and emphasizes the serious risk of relocation and job losses in Switzerland.
Effects on location and employment
Swiss banks provide approximately 120,000 jobs in Switzerland, train several thousand apprentices, and invest heavily in continuing education. As the banking sector's social partner, it is important for banks that banking regulation remains proportionate and allows them to maintain an environment in which they can remain internationally competitive and continue to offer attractive jobs.
This is particularly true for the last major Swiss bank of global systemic importance, UBS, which significantly contributes to the international prestige and attractiveness of the Swiss banking center in terms of employment. An additional, internationally uncoordinated capital requirement increases the risk of business model adjustments, which could ultimately impact employment and training opportunities.
Negative consequences on the economy and financial policy
The proposed full deduction would make international business from Switzerland significantly less attractive. However, foreign business contributes significantly to the financial center's success: approximately half of client assets managed in Switzerland (totaling approximately CHF 9.3 trillion) originate abroad, benefiting Swiss companies thanks to lower interest rates and more favorable financing costs.
With the proposed full deduction, Switzerland is going against international deregulation: UBS would thus have capital requirements approximately 50% higher than those of competing institutions in the EU, the United Kingdom, and the United States. At the same time, other financial centers are simplifying their regulations, particularly to support the economy; in the United States, this is expected to free up approximately $2.6 trillion in additional capacity for credit and capital market operations.
This measure would primarily affect UBS and would result in additional capital requirements of approximately $23 billion and annual recurring costs of approximately $2 billion. These costs are not isolated, but have a general impact on prices and supply. We also note that the expert report commissioned by the Federal Council (Alvarez & Marsal, June 2025) cites among the possible consequences in Switzerland a reduction in the supply of credit, lower deposit rates, and job losses.
Partial evaluation – lack of examination of alternatives
According to Swissbanking, the Federal Council's proposal once again prioritizes financial stability at the expense of competitiveness, which is essential for the financial center to fulfill its central role in the Swiss economy.
As already emphasized in the now-concluded consultation, the lack of a sufficiently reliable cost-benefit analysis and a transparent examination of less radical alternatives is regrettable. A thorough analysis of the regulation's impact (including the effects on employment, training opportunities, financing costs, and location decisions) is essential, particularly in the case of a major variant of this magnitude.
Requests from the banking world
In summary, Swissbanking calls on the Federal Council and the competent authorities to:
- to waive the full deduction/100% effective coverage of foreign holdings in the form of equity, as proposed
- examine proportionate and internationally coordinated alternatives that strengthen financial stability without disproportionately damaging the competitiveness of the financial centre and, consequently, employment prospects
- present a thorough impact analysis (including the effects on the labor market and employment) before enshrining in law an extreme, internationally incompatible variant.
Swiss banks support measures to strengthen stability and confidence in the financial center, provided they are proportionate and adequately address their impact on the real economy and employment. The proposed full deduction clearly does not meet these requirements.
Ticino Banking Association
Villa Negroni | 6943 Vezia
