BofA Keeps UBS Group at Buy Amid 'More Lenient' Swiss Capital Requirements Proposal

12:27 PM EDT, 09/01/2026 (MT Newswires) -- BofA Global Research reiterated its buy rating on UBS Group (UBSG.SW) as it noted the "more lenient" capital requirements proposed by a Swiss parliamentary committee compared with the stricter proposals by Switzerland's Federal Council. In a Tuesday note, the research firm said the committee on economic affairs and taxation watered down the council's original proposal on the treatment of foreign subsidiaries, allowing the banking group to meet 50% of foreign subsidiary capital requirements with additional tier 1 instruments. "This is significantly better than the proposal of the Federal Council as AT1 is much cheaper to hold than CET1," analysts said. "With c.$40bn equity in foreign subsidiaries, UBS currently has to risk weight this at 400% fully phased, so $160bn in RWAs. At a 12.5% CET1 ratio (go-to level for UBS AG), this is equivalent to 50% CET1 backing. Under the proposal this would mean no equity charge from foreign subs, as AT1s would cover issuances of up to c.$20bn. This would leave only the ordinance measures to affect CET1, which amount to c.$4.2bn." BofA also noted that the group is part of its "25 stocks for 2026" and Europe 1 list of top ideas. The Swiss stock has a price objective of 51 francs. "The end-result UBS is a highly attractive proposition, and the equity story combines the potential for more lenient capital requirements with areas of strong growth in wealth management & capital markets," the research firm added.