TBTF: Macroeconomic Consequences of a Full Equity Capital Deduction for Foreign Participations

The Federal Council has conducted a consultation on the adjustment of capital requirements for systemically important banks. The proposed regulation requires the parent companies of systemically important banks to fully deduct its s foreign subsidiaries from Common Equity Tier 1 (CET1) capital. In practice, the measure affects exclusively UBS as the only remaining globally active major Swiss bank.