Luxembourg finance minister 
Roth visited Switzerland from 18 to 20 May 2026, alongside Luxembourg for Finance. The agenda included meetings with financial and banking sector leaders, as well as talks with Swiss Federal Councillor Karin Keller-Sutter. Roth later stated that he had signed an agreement with Keller-Sutter in Bern to launch a structured financial dialogue between Luxembourg and Switzerland, aimed at strengthening bilateral cooperation and exchanges on shared financial and economic priorities.
The agreement does not centre on UBS. But it lands in a debate that is highly relevant to both countries: how small, open economies with large international financial centres preserve competitiveness while ensuring that global banking risks do not fall back on the state.
In Geneva and Zurich, Roth also spoke at receptions organised by LFF and at seminars involving Luxembourg financial industry bodies including ACA, Alfi and LPEA, linking the political dialogue to the insurance, funds and private assets sectors.
The timing is notable. Switzerland is debating how to prevent another Credit Suisse-style crisis from forcing the state into emergency action. UBS has estimated that the Swiss Federal Council’s proposed capital measures would require UBS AG to hold around $22bn in additional CET1 capital if implemented as proposed. Around $20bn of that relates to the full deduction of UBS AG’s investments in foreign subsidiaries, with around $6bn required at the start of the proposed phase-in period.
The bank said the figure would come on top of capital linked to the Credit Suisse acquisition, including around $9bn to remove regulatory concessions granted to Credit Suisse and around $6bn to meet the progressive add-on from a higher leverage ratio denominator and the increased market share of the combined business. Altogether, UBS stated that it could be required to hold around $37bn in additional CET1 capital if the Swiss proposals were adopted as currently designed.
Switzerland’s dilemma
The political dilemma in Bern is whether Switzerland can host a bank of UBS’s global scale without leaving the state exposed if another systemic failure occurs. Credit Suisse’s collapse left UBS as the country’s dominant global bank and put foreign subsidiary risk at the centre of the too-big-to-fail debate.
The Swiss Federal Department of Finance (FDF) has framed the reform as a way to reduce risks for the state, taxpayers and the economy. It stated that systemically important banks must be better capitalised and that Swiss parent banks should fully back participations in foreign subsidiaries with CET1 capital. Parliament is expected to debate the legislative proposal from summer 2026.
The Credit Suisse case is central to that argument. The FDF stated that, during the crisis, the sale of foreign subsidiaries as a stabilisation measure was not possible because foreign participations were only partly backed with capital. It argued that full CET1 backing would allow a systemically important bank to dispose of such subsidiaries during a stabilisation phase without damaging the parent bank’s capitalisation.
The Swiss Financial Market Supervisory Authority (Finma), Switzerland’s financial regulator, has also supported the Federal Council’s planned revision of the banking law. On 22 April 2026, the authority stated that the issue of foreign subsidiaries of systemically important banks not being fully backed by capital, known as double leverage, had been viewed internationally as a risk for more than 20 years. It added that removing double leverage was being recommended in Switzerland for the second time since 2012.
Finma’s position sharpens the political choice. It stated that elected officials must balance the interests of bank shareholders against risks for taxpayers. It also backed stronger preventive legal tools, including a responsibility regime, powers to impose fines, more active communication on closed proceedings and earlier intervention.
UBS pushes back
UBS accepts the need to draw lessons from Credit Suisse, but rejects the scale and design of the proposed rules.
The bank argued in its annual report that the full deduction of foreign subsidiaries from CET1 capital is excessive and not targeted, proportionate or internationally aligned. It also stated that the proposed treatment of deferred tax assets on temporary differences, capitalised software and prudent valuation adjustments combines the maximum requirements of several jurisdictions without sufficient regard for the overall impact.
UBS estimated that the incremental $22bn in CET1 capital at UBS AG would increase UBS Group AG’s CET1 capital ratio to around 18.5%, calculated from its target ratio of around 14%. It added that proposed measures related to deferred tax assets on temporary differences, capitalised software and prudent valuation adjustments would eliminate around $11bn of net CET1 capital at UBS Group AG, reducing the estimated group CET1 ratio from 18.5% to 16.5%.
The bank also said its current $22bn estimate was around $2bn lower than the $24bn estimate published on 6 June 2025, which was based on its first-quarter 2025 balance sheet, and $4bn lower than the estimate of $26bn based on UBS AG’s target capital ratio of 12.5%. UBS attributed the reduction partly to accelerated capital repatriation from UBS AG subsidiaries, the rapid wind-down of Non-core and Legacy, integration progress and improving US profitability expectations.
UBS said Switzerland already has one of the strictest regulatory capital regimes, including substantial progressive capital surcharges and a conservative early implementation of final Basel III rules. It warned that the Federal Council’s proposals would contrast sharply with developments in Europe and the US, where regimes have been proposed, or are expected, to be less restrictive.
The proposals are not yet the final law, but the parliamentary process expected from summer 2026 means UBS’s capital structure is now moving from regulatory argument into political negotiation.
The Swiss government presents a lower effective shortfall than UBS’s headline estimate. Based on end-2025 data, the FDF stated that full backing of foreign participations with CET1 capital, together with ordinance-level measures, would raise the CET1 requirement for the UBS parent bank by around $20bn, with ordinance measures contributing about $2bn. It also said UBS would have to accumulate around $9bn in CET1 capital to meet the proposed requirements because both UBS Group and the parent bank already exceeded applicable capital requirements at end-2025.
The FDF also rejected the argument that the measures would necessarily undermine competitiveness. It stated that stronger financial resilience can be a competitive advantage in retaining client trust and that, on a pro forma basis at end-2025, UBS Group’s CET1 ratio after implementation of all legislative and ordinance measures would be 15.5%, within the range of international peers.
The dispute is therefore a power struggle between bank and state. Switzerland wants to ensure that UBS cannot again place the country under emergency pressure. UBS argues that excessive national rules would damage its global competitiveness and weaken its ability to compete with US and European rivals.
A representative of UBS Europe declined to comment further, adding: “as a matter of general policy, we do not provide any further comments beyond the information already published in our Annual Financial Report”.
Luxembourg’s stake
Luxembourg’s exposure is different from Switzerland’s. It does not have a single domestic champion comparable to UBS, and its largest banks sit within the EU’s supervisory and resolution architecture. But the Grand Duchy faces a related policy problem: its financial centre is built on cross-border groups, foreign parent banks and business lines whose strategic decisions are often made elsewhere.
UBS Europe SE’s Luxembourg figures show why the debate matters locally. For Luxembourg specifically, UBS Europe SE disclosed 586 employees by headcount at 31 December 2025, down from 641 at end-2024. On a full-time equivalent basis, the Luxembourg figure was 567 FTEs in 2025.
Luxembourg generated €324.6m in revenues for UBS Europe SE in 2025, second only to Germany’s €564.7m and ahead of Italy’s €222.1m and France’s €211.9m. UBS Europe SE’s total revenues were €1.43bn.
Luxembourg’s profit before tax was €51.1m, with €13.7m in taxes and €37.4m in profit after tax. UBS Europe SE’s total profit after tax was €101.3m.
Those figures make Luxembourg a material location within UBS Europe SE. They also raise practical questions. If Swiss capital rules make foreign subsidiaries more expensive at group level, the impact could eventually be felt in capital allocation, business priorities, staffing or the balance between wealth management and asset management across European locations.
The Swiss authorities have said UBS can continue to grow abroad. But the FDF stated that future growth in foreign subsidiaries, or acquisitions of further foreign subsidiaries, would have to be financed entirely with equity rather than partly with debt at the expense of the Swiss parent bank’s financial resilience.
Shared lessons
The FDF also said alternatives had been examined and rejected, including restrictions on investment banking, different capital requirements for wealth management and investment banking, an increase in foreign-participation backing to 80% rather than 100%, use of AT1 or bail-in bonds and separation of the US business from the Swiss parent bank. It said separating the US business was considered a disproportionate encroachment on economic freedom.
The Swiss authorities also acknowledge that emergency state support cannot be categorically ruled out in every crisis. The FDF stated that the aim of the too-big-to-fail regime is to avoid state aid, while keeping open the possibility of emergency law in specific crisis situations in the national interest.
For Luxembourg, the lesson is not that it faces the same problem as Switzerland. The Grand Duchy is part of the EU banking union, with significant institutions supervised by the European Central Bank and governed by EU resolution rules. But the UBS debate is still relevant for a country whose financial centre depends on cross-border groups, local substance and international trust.
Roth’s structured financial dialogue with Keller-Sutter gives Luxembourg and Switzerland a channel to discuss those shared pressures, including competitiveness, stability, cross-border banking and the governance of global financial groups from small jurisdictions.
The UBS case shows that financial-centre strategy cannot only be about attracting assets, jobs and revenues. It must also ask where losses would land in a crisis, who controls capital when stress arrives and whether private balance sheets could become public liabilities.
That question now sits close to Luxembourg too. Switzerland and the Grand Duchy have complementary financial centres, but both depend on credibility and stability. UBS has turned that shared concern into a live political test: when a bank becomes too big to fail for the country that hosts it, the question is no longer just how much capital it holds, but whether the state still has the power to set the terms.
