Swiss government on Friday proposed strict new capital rules that would require banking giants UBS After a 2023 acquisition of Credit Suisse’s shocked competitor, it has another $26 billion in core capital.

These measures also mean that UBS will need to make the most of its foreign units and conduct fewer share buybacks.

"The increased demand for CET1 Capital needs to reach $26 billion to reduce AT1 bond holdings by about $8 billion," the government said in a statement Friday.

Swiss National Bank said it supports the measures the government has taken as they will "significantly strengthen" UBS's resilience.

"In addition to reducing the likelihood of large systemic banks like UBS falling into financial trouble, the measure also increases the room for banks to stabilize themselves in the crisis through their own efforts," SNB said in a statement Friday.

UBS has been battling the ghost of stricter capital rules since its strategic mistakes, mismanagement and scandal at Credit Suisse.

The shocking demise of banking giants has also brought Swiss financial regulator Finma to fire for its scarce oversight of banks and the final timing of its intervention.

Swiss regulators believe UBS must have stronger capital requirements to protect the national economy and financial system, as the bank's balance exceeded $1.7 trillion in 2023, about double the Swiss economic output projected last year. UBS insists that this is not “too big to fail” and that additional capital requirements (designed to consuming cash liquidity) will affect the competitiveness of banks.

At the heart of the deadlock is concern about UBS' ability to buffer any expected losses in its foreign units, and so far it has the responsibility to use capital capital in the parent bank to support 60% of the capital.

Higher capital requirements can reduce the bank's balance sheet and credit supply by strengthening lenders' capital costs and reducing their willingness to lend, and mitigating their interest in risk. For shareholders, attention will be the potential impact on the allocable disposable funds, including dividends, stock buybacks and bonus payments.

"Although the end of Credit Suisse's estate business should free up capital and reduce UBS' costs, most of these benefits may be absorbed by stricter regulatory requirements," a note before Finma's announcement said in a note from NOTREDSTAR.

"Such measures could put UBS' capital requirements far higher than those faced by U.S. competitors, putting pressure on returns and reducing the prospect of closing its long-term valuation gap. Even the long-term premium ratings relative to European banking have evaporated recently."

The prospect of strict Swiss capital rules and UBS's extensive U.S. operations through its core global wealth management division is that White House trade tariffs have already had an impact on the bank's fate. In a dramatic twist, banks lost the most valuable lender on the continent because of their market value to the Spanish giant Spanish Santander in mid-April.