An eagerly awaited decision came on the committee's recommendation on the Federal Council's bill covering UBS's capital. It had been postponed at the previous meeting in early August (finews reported).

Unlike the Federal Council, which wanted foreign subsidiaries backed entirely by common equity tier 1 capital, the committee favors a solution of 50 percent common equity and up to 50 percent additional tier 1 bonds.

Nobody Argued Against Tightening

«What was undisputed for all of us was that we want a tightening,» committee chairman Erich Ettlin (FDP) said at an evening press conference. At the same time, the aim was to make sure «that the economy does not suffer from excessive regulation.»

The committee majority built the lessons of the Credit Suisse collapse into its concept.

Trigger at 11 Percent Instead of Seven

A higher trigger on the additional tier 1 bonds will also apply, Ettlin said, at around 11 percent instead of seven up to now. «If capital falls below that threshold, the bank has to act.»

The committee majority sees this «as a compromise solution.» International regulation was used as a benchmark as well.

Ten Votes to Two in the Final Ballot

The overall vote produced ten votes in favor and two against.

Ettlin pre-emptively brushed aside any charge that this was a gift to UBS. «UBS is not saying this is great, because additional tier 1 will be expensive.»

A Defeat for the Finance Minister

Observers nevertheless read the decision as a clear defeat for finance minister Karin Keller-Sutter (FDP), who is understood to have thrown considerable personal weight behind the Federal Council's solution.

For lack of time, the committee did not take up the public liquidity backstop, which had also been on the agenda.

An Opening Win, but the Fight Goes On

Monday's decision can be read as a clear opening win for UBS in the parliamentary tussle. Given the size of the committee majority, the full chamber is unlikely to make substantial changes to that position.

The bill then moves on to the National Council. Final decisions are likely to be some way off.