UBS Gains Legal Closure on Credit Suisse Bonuses as Bern Weighs a Levy Only It Would Pay

Switzerland's highest court has handed UBS a measure of legal finality in the long unwind of the Credit Suisse takeover, even as the bank's home market turns up fresh regulatory questions. Publication of the reasoning behind a Federal Court ruling confirmed that bonus clawbacks imposed by the government on former Credit Suisse executives will stand, with the judges in Lausanne overturning a contrary 2025 decision and definitively rejecting compensation claims tied to the withheld pay.

The dispute centered on bonuses promised but not yet paid at the time of the emergency rescue, along with variable salary components. Under the government's conditions, the top executive tier faced a full cancellation, the level below it a 50 percent cut, and the next tier down a 25 percent reduction. Twelve bankers had brought a test case against the retention of their special compensation; as many as 1,000 employees in total fall under the ruling, and their claims are now void.

For UBS, the outcome closes one legal front left over from the March 2023 rescue, which Bern had backstopped with a CHF 9 billion loss guarantee and liquidity assistance of up to CHF 100 billion. Both safety nets were terminated early by the bank as the situation stabilized.

A Capital Question in Bern

Attention now shifts to the Swiss debate over tougher capital requirements for systemically important lenders. Goldman Sachs analysts estimate that such a reform could tie up roughly USD 17 billion in additional equity. After deducting existing core capital held above regulatory thresholds, they calculate a remaining capital gap of about USD 7 billion for the UBS parent company.

The discussions hinge on how much backing foreign corporate subsidiaries must carry. The Council of States voted in September for a 90 percent hard core capital requirement, and a National Council committee is expected to take up the legislative proposal toward the end of October.

A Levy Aimed at One Bank

Parallel to the capital rules, a committee of the Council of States commission has backed a fee on systemically important banks that draw on the public liquidity backstop. In the committee's assessment, UBS is currently the only institution that meets the criterion of international business activity — meaning the charge would land squarely on the big bank.

The push comes as international supervisors press for more dependable crisis mechanisms. On October 9, the Financial Stability Board urged authorities worldwide to strengthen emergency financing for failing banks, with a study by the international body identifying gaps in liquidity provision during distress, according to Reuters.

Contingency Thinking and a US Bright Spot

Stricter requirements had already set off strategic speculation earlier in the process. People familiar with the matter said the bank is examining options should Switzerland adopt tougher capital rules, including relocating its headquarters or a merger, with a takeover by another institution also under consideration. No active talks are underway, the report said.

Some relief arrived from the operating side in the US. In its Investor Watch report published on Wednesday, the bank said wealthy American clients are acting with more confidence: 64 percent of surveyed investors are very optimistic about the US economy in the coming months, up from 55 percent in 2024. The improved sentiment in US wealth management underscores the importance of the North American market at a time when domestic regulation is generating uncertainty.

Market Backdrop

The stock has held its ground through the political headwinds. UBS shares closed yesterday at EUR 42.64, up 7.2 percent since the start of the year, and trade above their 200-day moving average of EUR 40.85. In European trading the price stands at EUR 42.79, against a 200-day average of EUR 40.86, leaving a clear gap to the 52-week high of EUR 48.19 — a spread that reflects the ongoing debate over the bank's future capital structure.