Swiss lawmakers have proposed a compromise on new capital requirements for UBS Group AG (UBS.US), aiming to maintain its international competitiveness. The move drove the bank's shares to their highest level since 2008, with pre-market gains exceeding 1.5% to $43.30.

Previously, the Swiss government suggested that UBS—which became the country's sole global bank after acquiring the failing Credit Suisse in 2023—should raise capital adequacy for its foreign subsidiaries to 100%, up from the current 60%, to cover potential overseas losses.

Following reports of the compromise proposal by a group of parliamentarians, UBS shares surged. The bank's stock has doubled since the eve of its Credit Suisse takeover.

With UBS’s balance sheet roughly twice the size of Switzerland’s annual economic output, the government is determined to avoid a repeat of Credit Suisse’s collapse. The proposed reforms would require UBS to secure an additional $24 billion in capital, primarily through Common Equity Tier 1 (CET1).

However, the parliamentary group suggested allowing UBS to use Additional Tier 1 (AT1) debt to cover up to 50% of its foreign subsidiary capitalization requirements, easing the burden.

The proposal, backed by lawmakers from the right-wing Swiss People’s Party, center-right FDP, centrist The Centre, and Green Liberal Party, supports imposing the world’s strictest capital rules on UBS—but with caution.

The document stated, "However, the gap between Swiss regulations and those in the EU, UK, U.S., and major Asian financial hubs must not be so wide as to harm competitiveness," urging a balanced solution.

The plan also recommends capping investment banking activities at 30% of risk-weighted assets on the bank’s balance sheet.

UBS called the proposal "more constructive than the government’s extreme approach" but noted Switzerland already has the world’s toughest capital rules. It urged regulations to be "proportionate and internationally aligned."

The finance ministry confirmed the government has submitted its proposal and will decide on next steps in due course. Last week, reports indicated authorities were prepared to soften some new rules.