UBS (UBS) and other banks affected by Switzerland's new capital requirements should be provided a transition period of seven years to fully comply with the new regulations, the country's Federal Council said Friday.

The Swiss government said it has launched a consultation until Jan. 9 on amendments to its Banking Act and the Capital Adequacy Ordinance, under which "systemically important banks in Switzerland would be required to provide full capital backing for their participations in foreign subsidiaries in future."

At present, only UBS would be "significantly" impacted by the new regulations, the Federal Council said. Common equity tier 1 capital backing should total 65% upon the provision's entry into force, increasing by 5 percentage points annually thereafter until the 100% target is reached, it said.

The Federal Council, the Swiss National Bank, and the Swiss Financial Market Supervisory Authority agree that the proposal is "appropriate, necessary, and targeted," and can be managed by UBS.

UBS did not immediately respond to MT Newswires' request for comment.