These capital requirements would up the bar on core capital (removing currently allowed items such as software and deferred tax assets from counting as capital). Software was counted as an intangible asset with some regulatory value, especially if it supported core banking operations. However, concerns that is less loss-absorbing and more volatile in valuation than current treatment requires have prompted its exclusion from core capital (CET1- Common Equity Tier 1 capital, basically the highest form of capital, acting as a high quality shock absorber in the event of losses).
UBS will need to decide what to do - either push back, and hope for the best, or relocate its HQ to be outside of Swiss regulation, or plan both in parallel.
The proposed rules are to avoid an incident such as the collapse of Credit Suisse in 2023 from happening again. UBS has criticised the proposal as being non-proportionate.
