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business22h ago
Key facts: Swiss Rules Trap $22B at UBS; AT1: Supplement, Risk
- UBS now must hold about $22 billion of trapped AT1 capital due to Swiss rule changes after the Credit Suisse deal.
- Analysts estimate about $12 billion more in incremental needs beyond the trapped capital.
- UBS Chief Executive Sergio Ermotti said AT1 bonds are a supplement to CET1 equity.
- The regulatory changes come in the wake of UBS's Credit Suisse deal, affecting capital structure.
- Experts warn that AT1 instruments can be converted or written down in crises, impacting stability.
- UBS Coutrolled capital needs follow the Credit Suisse integration and Swiss rule changes.
- Trapped capital amounts to about $22 billion, as a significant portion of total extra capital.
- Sergio Ermotti stated AT1 bonds act as a cushion to CET1, not a primary buffer.
- The developments are linked to the broader regulatory framework governing AT1 instruments.
- The story highlights potential risks for traders tied to AT1 instruments amid crisis scenarios.
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