Swiss parliament panel fails to reach deal on UBS capital rules

BERN, Aug 11 (Reuters) - A Swiss parliamentary committee on Tuesday failed to reach an agreement on proposed new banking regulations for UBS as some lawmakers pushed to soften tougher rules drafted by the government after Credit Suisse's collapse.

The draft bill would require UBS to hold about $20 billion in additional Common Equity Tier-1 capital (CET1) to help prevent another banking crisis and protect taxpayers.

But UBS, which acquired Credit Suisse following its 2023 demise, argues the requirement is excessive, would undermine its competitiveness and damage Switzerland's banking sector.

The bill is being examined by the economic affairs and taxation committee of parliament's upper house, where lawmakers concerned the measures are too burdensome have proposed amendments to reduce the capital requirement for UBS.

No agreement was reached on Tuesday and the committee will reconvene on August 31, Fabio Regazzi, a committee member from the Centre party, said. The goal remains to bring the bill to an upper-house vote in September, he said.

At the heart of the bill is a proposal for UBS to fully capitalise its foreign subsidiaries, up from 60% currently, using CET1 capital alone.

Under the current framework, part of the requirement can be met with less costly forms of capital.

The committee has discussed allowing UBS to use Additional Tier 1 (AT1) capital to meet part of the requirement. AT1 debt is cheaper to hold than CET1 capital and is designed to absorb losses during times of stress, but regulators regard it as less secure.

Lawmakers said discussions have also covered steps to strengthen AT1 instruments, including introducing a new, higher regulatory trigger point.

That could require UBS ⁠to suspend payouts to investors if its capital ratio falls below a specified threshold, enhancing the loss-absorbing capacity of AT1 bonds.

However, lawmakers said details of how such measures could work have yet to be resolved.

(Reporting by Dave Graham. Editing by Thomas Seythal and Mark Potter)