UBS CEO Rejects 90% CET1 Rule, Shares Slip While Wealth Management Shows Momentum

UBS shares fell more than 3% on September 22 after CEO Sergio Ermotti rejected a proposed 90% CET1 capital requirement as no real compromise, according to Investing.com. "The current proposal from the Federal Council at 100% and the 90% is de facto the same," he said, adding that a 90% CET1 requirement would significantly damage UBS's competitiveness. The Swiss parliament's upper house votes on the new capital rules, drawn up after Credit Suisse's 2023 collapse, on Wednesday, September 23.

UBS instead backs an alternative from the parliamentary committee known as WAK-S, which would split the requirement 50/50 between CET1 and AT1 capital. Ermotti called it a balanced solution despite being expensive for the bank, and argued that such a framework would have exposed Credit Suisse's problems as early as 2021.

On operations, Ermotti said the third quarter is progressing well against plan. Wealth management transactions are up year over year, although growth rates have declined versus the previous year, and he cited good momentum as the Credit Suisse integration nears completion. Investment banking advisory fee pools are expected to decline in line with market conditions. At a Bank of America financials conference, UBS said more than 90% of roughly 3,000 inherited Credit Suisse applications have been decommissioned, a separate integration metric from the capital proposal.

The September 23 vote is the immediate catalyst. A result closer to the 50/50 CET1/AT1 structure would ease pressure on UBS's capital return plans, while a 90% or 100% CET1 outcome would likely raise the bank's capital needs.