UBS Group AG is facing new capital requirements of up to $ 26 billion, which will be implemented gradually in the next decade, according to Swiss government’s bank reform proposals. The announcement finally gives clarity to investors after months of uncertainty.

The biggest blow, as Bloomberg reports, is expected to come from a proposal requiring UBS to increase its capital in Switzerland against foreign units from 60% to 100%, according to the long -awaited legislative draft released on Friday. The government estimates that this will force UBS to add up to $ 23 billion to capital in its basic unit based in Switzerland.

UBS shares reinforced their profits on Friday, up 5% at 3:30 pm Zurich Time.

However, these proposals are a defeat for UBS president Colm Kelehher, and Managing Director Sergio Ermotti, who were pressing for more than a year to prevent some of the reforms proposed after Credit Suisse’s collapse in 2023.

The Swiss government justified its stance by arguing that UBS will be more durable in the event of a crisis and, in any case, the bank has many ways to mitigate the impact of changes. The amount of $ 26 billion, in Tier 1 joint shares capital, corresponds to the total impact of all new measures, based on the Bank’s current balance sheet.

At the same time, the government said the measures may also result in a decrease of approximately $ 8 billion in the use of convertible debt or AT1s as capital. This would leave a gap of approximately $ 18 billion in “Active Operation” chapter, as he noted.

The proposal for UBS foreign units predicts that, in the event of an emergency, the bank “should be able to divest its subsidiaries abroad, either in part or completely, without adversely affecting the capitalization of the parent company,” the government said in a statement. “The required capital reinforcement can be ideally achieved without increasing share capital, without excessively limit organic growth and without excessive reduction in distribution to shareholders.”

The government also presented a list of additional measures to be incorporated into regulatory acts and legislation, including significant new responsibilities for the Swiss financial regulatory authority.

The Swiss government has also presented new rules for the “quality” of capital, which update how banks must evaluate intangible data, such as deferred tax data, privately owned software and other difficult information to evaluate their balance sheets. These changes may increase capital requirements by up to $ 3 billion.

These arrangements are planned to be implemented through a ministerial decree, which does not require the approval of the parliament. Therefore, they may be in force as early as the following year.

The government will now finalize the bill and submit it to Parliament, which is expected to look at it in 2027. The new legislation is not expected to enter into force before 2029. Since UBS will be able to put pressure on Members, there is a possibility that the final plan will be milder. In any case, the Government has proposed a period of adjustment between 6 and 8 years after the voting of changes, which means that full compliance may not be required before 2035 or later.