UBS suffers a major setbackUBS suffers a major setback: regulatory pressure hits its share price and dims buyback expectations
By Ion Jauregui –ActivTrades Analyst
UBS Group AG (Ticker SWX: UBSG.CH), Switzerland’s largest bank, faces a fresh blow. The Swiss government has proposed demanding an additional $26 billion in top-tier regulatory capital following the historic takeover of Credit Suisse. The market reaction was swift, triggering a particularly volatile session yesterday: after a brief spike, UBS shares dropped more than 7%, marking their worst day in two months—just as the bank had announced plans to distribute dividends in the coming year. Despite strong earnings and a $3 billion dividend payout plan for 2025, the market is now pricing in a potential negative impact on share buybacks in 2026 and 2027. Global banks are watching closely.
A new scenario of "Swiss regulatory slap"
The so-called “Swiss regulatory slap” aims to strengthen the national financial system, raising the CET1 ratio to 17% and requiring all foreign subsidiaries to be fully capitalized. UBS has labeled the proposal “extreme and unnecessary,” though it acknowledges that implementation would not begin before 2028. Even so, the market fears that the regulatory cost may directly affect shareholder returns.
Fundamental analysis: strong results under pressure
The Swiss bank closed the first quarter of 2025 with a net profit of $1.7 billion, thanks largely to a strong performance in its wealth management division, which brought in $32 billion in new assets—pushing total assets under management past $6.2 trillion. Return on CET1 capital reached 11.3%, though the officially reported figure stands at 9.6%, a target criticized by the regulator. UBS forecasts EPS growth of more than 25% annually over the next five years.
However, pressure to boost capital threatens to slow share buybacks and dilute mid-term profitability—especially if economic conditions tighten further. This apparent strength could be constrained if UBS is forced to prioritize capital retention over shareholder distributions, as many in the market now anticipate.
Technical analysis: chart signals warning signs
Following the announcement of new requirements, UBS’s chart is showing signs of weakness. After reaching yearly highs, the stock lost momentum and broke through key support levels. Volatility has increased significantly, and although the long-term ascending channel remains intact, the coming days will be crucial in determining whether this is a technical pullback or the beginning of a bearish trend.
From a technical standpoint, this week’s drop has placed UBS at a critical juncture. Key support lies at the 20.01 CHF lows, while the 26.41–28.79 CHF range appears to offer some short-term stability. Below that, 23.40 and 21.87 CHF serve as additional buffers against further downside. A sustained close above current levels is needed to restore the bullish outlook, which currently appears to have stalled. RSI remains in neutral territory, with no clear oversold signals, while MACD has lost its bullish crossover. The previously bullish moving average crossover that began in mid-May is now fading, showing signs of trend exhaustion. On the bright side, price profile analysis reveals a potential point of control above the current range, near 29.30 CHF. If the price manages a weak upward continuation toward that area, a rebound from the current 26.49 CHF level could unfold.
Conclusion
UBS faces a delicate moment: Switzerland’s regulatory push sends a clear message about systemic prudence but also raises doubts about the bank’s short- and mid-term appeal to shareholders. Despite its strong fundamentals and global leadership, the market remains cautious. Technically, the stock is at a crossroads: a rebound from key support could reignite optimism, but a break below 25 CHF would open the door to a gloomier scenario.
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