UBS’s Regulatory Winds Ease as AT1 Compromise Gains Momentum

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A shift in Switzerland’s political climate appears to tilt in UBS’s favor as a cross‑party proposal on capital rules gains traction. A compromise aimed at easing the bank’s future equity requirements is gathering support, reducing some of the regulatory pressure UBS has faced since the Credit Suisse rescue. Concurrently, UBS continues to push ahead with the ambitious integration of its former rival, and so far the operation has held up well from an earnings perspective.

The center-right SVP party has aligned behind a proposed solution for UBS’s future capital framework. With roughly a third of the seats in the National Council, the SVP is a decisive player in the Swiss regulatory debate.

Key elements of the plan:

• The SVP backs a compromise allowing UBS to rely more on AT1 bonds (Additional Tier 1 Convertible Bonds) to meet a portion of the new capital requirements. These are subordinated instruments designed to absorb losses and bolster the bank’s buffers without requiring full heavy-weight equity from the outset.
• The original government proposal envisioned roughly $26 billion in additional equity.
• The compromise proposal was introduced by a bipartisan group in December.
• Once the position became public, UBS shares moved into positive territory.

Market takeaway: the odds that final rules will be milder than initially feared have increased, easing perceived regulatory risk and offering more planning certainty.

Regulation after the Credit Suisse takeover

The trigger for the regulatory debate was Switzerland’s emergency intervention to rescue Credit Suisse in 2023. In response, authorities overhauled the banking regulatory framework to bolster system resilience. UBS has since been managing the integration of Credit Suisse while contending with tighter capital demands.

SVP’s backing of the AT1 approach adds political support for a pragmatic resolution, potentially curbing long-term equity drains compared with earlier scenarios.

In the market, the relief is visible: UBS trades at $47.30, roughly 1.7% below the 52‑week high of $48.11. Over the last 30 trading days the stock has advanced about 33%, reflecting the shift in expectations around regulatory severity.

Headcount reductions and the integration timetable

Parallel to regulatory developments, UBS’s internal overhaul is moving ahead at full speed. A fresh round of job cuts is set to begin in mid-January, with another phase planned for the following year. The IT migration tied to Credit Suisse is expected to be completed by year-end, though some ultra‑high‑net‑worth client projects have been delayed by several months, underscoring the complexity of the transition.

Scale of the integration so far:

• The merged group now employs around 120,000 people.
• Approximately 15,000 positions have already been eliminated.
• The internal target calls for a total of 35,000 job cuts.
• By 2027, a further roughly 10,000 roles could disappear.

UBS is entering the final year of the Credit Suisse integration, with IT migration for the acquired bank’s clients scheduled to wrap up by year-end. The delays for certain UHNW clients illustrate the operational complexity involved.

From an investor’s viewpoint, the market is weighing the restructuring costs while rewarding the clarity and discipline of UBS’s integration plan.

Operating performance remains solid despite costs

UBS has delivered resilient results even as it bears substantial integration costs. In the third quarter of 2025, net income rose to $2.4 billion, up 74% from the year-ago period. The bank’s diversified model—comprising asset management, investment banking, and consumer banking—continues to generate strong earnings under challenging conditions.

Valuation and technical backdrop support the narrative of a stock with momentum:

• Market capitalization sits around $147 billion, with a price/earnings ratio of about 21 based on the trailing twelve months.
• The share price of $47.30 sits roughly 28% above the 50‑day moving average of $37.07 and well above the 100‑day moving average of $35.64.
• The RSI stands at 63.7, signaling a robust uptrend without overbought signals.
• Annualized volatility for the past 30 trading days runs near 90%, underscoring ongoing price swings amid political and integration-driven dynamics.

Two major influences shaping UBS’s trajectory

Today’s UBS story is defined by a twin dynamic. On one side, regulatory pressures appear to ease, as political support for the AT1 compromise reduces anticipated equity burdens. On the other, the bank’s integration program continues to unfold with clearly defined targets through 2027.

The competitive edge is evident in the earnings trajectory, suggesting the bank can navigate its restructuring from a position of strength. For the next leg of the journey, the critical questions are whether the AT1 compromise becomes law and whether UBS can execute its integration plan and personnel reductions as planned.