New Swiss regulations could limit UBS share buybacks and increase the cost of its international expansion.
Following a major regulatory overhaul after the Credit Suisse collapse, the Swiss government has proposed new capital requirements that could lead UBS to temporarily reduce its share buyback programs. The initiative aims to reinforce the country’s financial stability framework.
Stricter Oversight to Bolster the Banking System
On Friday, the Swiss federal government announced new proposals aimed at increasing the core capital requirements for UBS, particularly for its foreign subsidiaries. The measures are part of a broader effort to reform financial oversight in the wake of Credit Suisse’s unexpected collapse in 2023. The goal is to prevent the transfer of financial risks from international operations to the domestic Swiss market.
Immediate Impact: Temporary Reduction in Share Buybacks
A key implication of the new regulations is a likely temporary reduction in UBS’s share repurchase activities. In its official statement, the government emphasized that UBS may need to redirect some of its financial resources toward strengthening its balance sheet, rather than returning capital to shareholders. While this may reduce return on equity in the short term, officials argue it will lower systemic risk and enhance overall financial resilience.
Dividend Payments Still Possible, Subject to Profitability
Despite tighter restrictions on share buybacks, the government clarified that dividend distributions remain possible. These payouts, however, are contingent upon the bank’s profitability and the proper implementation of transitional arrangements. This approach reflects an attempt to maintain investor confidence while reinforcing the bank’s capital base.
Higher Costs for UBS’s Global Expansion
The statement also noted that UBS’s international expansion will become more expensive under the new rules. Any future growth in foreign subsidiaries or acquisitions will have to be financed exclusively through the bank’s core capital. This restriction limits UBS’s flexibility in foreign markets and could lead to delays or revisions in its international strategy—particularly in highly competitive global financial environments.
UBS Maintains Share Buyback Plans Amid Pressure
Despite the mounting regulatory headwinds, UBS Chairman Colm Kelleher reaffirmed in April 2025 that the bank intends to proceed with its $3 billion share buyback program this year. Kelleher emphasized that UBS aims to strike a balance between regulatory compliance, financial strength, and shareholder returns. His comments signal a cautiously optimistic stance in the face of increasing oversight.
Analysts: Balancing Act Between Compliance and Profitability
Financial analysts suggest that UBS now faces a delicate balancing act. On one side, it must meet shareholder expectations for growth and profitability, while on the other, it must comply with the new regulatory landscape designed to minimize systemic risk. This dynamic could lead to a strategic reevaluation in both the short and medium term.
Conclusion: Stability at the Cost of Short-Term Returns
While these new measures may constrain UBS’s profitability and capital return policies in the near term, they are designed to fortify the long-term integrity of Switzerland’s banking system. UBS will now be required to navigate a complex path—balancing growth, regulatory obligations, and investor expectations in a rapidly evolving global financial environment.
