Investing.com -- UBS stock spiked 4% on Friday after reports emerged that the Swiss government plans to water down part of a banking regulation package that could have required the bank to add up to $24 billion in additional capital.
According to Reuters, citing three people familiar with the matter, the government is preparing to soften some rules under its direct control, including regulations related to the valuation of deferred tax assets and software. These specific measures account for approximately $11 billion of the total extra capital UBS might have needed to hold.
However, the government is expected to maintain its proposal to parliament requiring UBS to fully capitalize foreign subsidiaries at home, which represents the largest portion of the potential $24 billion capital requirement, according to two sources.
The potential easing of regulations comes as welcome news for UBS, which has repeatedly warned that the stricter capital rules would harm both the wealth manager and Switzerland as a financial center. In recent weeks, industry groups, cantonal governments, and influential lawmakers have joined UBS in expressing concerns that such regulations could make Swiss banking uncompetitive.
