UBS May Cut Buybacks as Swiss Capital Rules Tighten

UBS may need to reduce share buybacks under new Swiss government proposals that aim to strengthen the country’s financial system in the aftermath of Credit Suisse’s 2023 collapse. The government said Friday that it plans to impose higher core capital requirements on the bank’s foreign subsidiaries.

While UBS is expected to maintain dividend payments and organic growth, the government noted that meeting these new rules may mean “fewer share buybacks and slightly lower return on equity” in the near term. UBS Chairman Colm Kelleher said in April the bank still plans to repurchase up to $3 billion in shares next year, despite these looming changes.

The new capital requirements are part of broader efforts to make Switzerland’s financial sector more resilient. They target foreign units in particular, meaning that expansions abroad will become costlier because they must be fully financed with core capital. This could dampen UBS’s acquisition appetite or limit how much it returns to shareholders as it adapts to the new regulations.

Despite the tighter capital rules, UBS is still expected to pursue some international growth. The Swiss government emphasized that “appropriate transition periods” would be granted to ensure the bank can adapt without abruptly slashing shareholder rewards.

The updated framework underscores how the collapse of Credit Suisse continues to shape Switzerland’s regulatory landscape, prompting a rethink of how its biggest lender is supervised in an increasingly interconnected global financial system.