Swiss lawmakers are likely to compromise on the most contentious part of their new capital requirement rules in a victory for UBS, the Financial Times has reported.

UBS – the country’s largest bank by a wide margin – has aggressively lobbied the Swiss government over regulation that could increase the banks’ capital requirements by up to $26 billion.

Sources close to the matter have told the Financial Times that this portion of the legislation is likely to be watered down before entering parliament for debate. A core group of lawmakers privately indicated to UBS that they will “solve the problem by agreeing on a compromise,” a source said.

The legislation is composed of two parts. The first will tighten restrictions on UBS’s capital accounting, making it harder for the bank to count items such as deferred tax assets and in-house software on its balance sheet. This portion does not require parliamentary approval.

The second would require the bank to fully capitalise its foreign subsidiaries, at a cost of around $22 billion. The bank has warned this would reduce the country’s competitiveness internationally, and privately suggested it may consider moving to other jurisdictions if the legislation is passed in its current form.

The legislation follows increased scrutiny of Switzerland’s famously opaque financial in the wake of the collapse of UBS’ main rival, Credit Suisse, in 2023, after which it was bought by UBS in a government-backed deal.

This news may be seen as a vindication of the bank’s lobbying strategy, which it was warned earlier in the month may be undermining parliamentary support.

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