Business Context and Reporting Period
This Form 6-K, dated June 6, 2025, contains an ad hoc news release from UBS Group AG and UBS AG regarding regulatory proposals published by the Swiss Federal Council. The filing addresses the bank's response to potential changes in Swiss capital, resolution, and regulatory regimes following the acquisition of Credit Suisse.
Key Financial Metrics and Capital Requirements
The filing does not report standard period-end revenue, profit, or cash flow figures. Instead, it focuses on pro-forma capital requirements under proposed regulations:
- Target CET1 Ratio (UBS AG): 12.5% to 13%.
- Target CET1 Ratio (UBS Group AG): Around 14%.
- Proposed Incremental Capital (New Regulations): Approximately USD 24 billion required at UBS AG on a pro-forma basis if proposals are implemented as stated.
- Existing Incremental Capital (Credit Suisse Acquisition): Approximately USD 18 billion required to meet existing regulations and remove regulatory concessions.
- Total Additional CET1 Capital Required: Approximately USD 42 billion in total under the combined scenarios.
- Projected CET1 Ratio Impact: The proposed measures would result in a Group-level CET1 ratio of around 17% (underrepresenting capital strength) or 19% at the UBS AG level.
Material Changes and Regulatory Impact
UBS strongly disagrees with the proposed extreme increase in capital requirements, citing a lack of proportionality and international alignment. Key material changes proposed by the Swiss government include:
- Full deduction of investments in foreign subsidiaries from CET1 capital (impacting ~USD 23 billion).
- Full deduction of deferred tax assets on temporary differences (TD DTAs) and capitalized software from CET1 capital.
- Increased prudential valuation adjustments (PVAs).
- These changes are not expected to become effective before 2027.
Guidance, Outlook, and Management Commentary
Management maintains its strategic targets despite the regulatory uncertainty:
- Return Targets: UBS maintains a target underlying return on CET1 capital of around 15% and an underlying cost/income ratio target (specific rate not provided in text).
- Capital Returns (2025): UBS reaffirms intentions to accrue for a ~10% increase in the ordinary dividend per share and repurchase up to USD 2 billion of shares in the second half of 2025 (totaling up to USD 3 billion for the year).
- Outlook: The bank will provide an update on longer-term return targets once the timing and final outcome of regulatory changes become clearer.
- Strategy: UBS will actively engage in the consultation process to evaluate alternatives and mitigate negative effects on shareholders.
Investor Verification Checklist
- Verify the final outcome of the Swiss Federal Council's regulatory consultation process and the effective date of any new capital rules.
- Confirm the specific cost/income ratio target mentioned in the outlook, as the exact percentage was omitted in the provided text.
- Monitor the integration progress of Credit Suisse through 2026 and the achievement of associated cost reductions.
- Assess the impact of the proposed USD 24 billion capital deduction on UBS's ability to maintain its 14% Group CET1 target.
- Review the execution of the USD 3 billion capital return plan (dividends and buybacks) in the second half of 2025.