Investing.com -- UBS Group AG (SIX:UBSG) (NYSE: NYSE:UBS) shares fell sharply during Tuesday’s trading session, with the stock dropping as much as 7% amid concerns over new capital requirements. The Swiss banking giant faced analyst skepticism regarding the impact of Switzerland’s proposed legislative changes on its competitiveness and ability to return capital to investors.
The decline marks the most significant drop for UBS in two months, reversing the initial gains seen last Friday after the Swiss government’s capital requirements were made public. The announcement ended a period of uncertainty, but analysts have since raised alarms about the severity of the proposals. JPMorgan Chase (NYSE:JPM) analyst Kian Abouhossein noted the negative implications for UBS, cutting his forecast for the bank’s share buybacks significantly—down to $3.5 billion from $6 billion for next year, and to $4 billion from $8 billion for 2027.
The legislative proposals, if enacted, could require UBS to increase its capital cushion by as much as $26 billion. The bank has criticized the draft as "extreme" and is actively seeking to influence the legislative process in Switzerland. Despite confirming its payout plans for the current year, UBS has indicated it will provide an update on its "2026 capital returns ambitions" with its fourth-quarter results.
Citi analyst Andrew Coombs commented on the mixed outcomes of the proposals. He acknowledged the high end of the capital requirements but pointed out the extended transition period, which could mitigate immediate impacts on dividends and buybacks. However, Coombs expressed concerns over potential amendments during the consultation and legislative process, as well as UBS’s earnings momentum compared to peers.