Swiss lawmakers have advanced a compromise allowing UBS Group AG to meet half of the additional capital requirements backing its foreign subsidiaries with Additional Tier 1 bonds rather than Common Equity Tier 1 capital. The Economic Affairs and Taxation Committee of the Council of States voted 10-2 with one abstention on August 31, retreating from the Swiss government’s plan for 100% CET1 backing linked to roughly $20 billion in extra capital after the Credit Suisse collapse. Under the proposal, UBS could keep CET1 near current levels while issuing more AT1 bonds, which are cheaper to hold but viewed by regulators as weaker loss-absorbing tools. To strengthen AT1 credibility, the committee added a trigger if the CET1 ratio falls below about 11%, forcing a halt to dividends, share buybacks and AT1 coupons and cutting bonuses unless capital is rebuilt in time. Jefferies analysts called the outcome more lenient; the Swiss Bankers Association welcomed AT1 flexibility while still opposing the extra capital rule, and the Social Democratic Party criticised the concessions ahead of lower-house review. The bill goes next to a full upper-house vote in the September 14 to October 2 autumn session, with the broader process expected to run at least into next year.