The bank explained how it intends to cope with proposed stricter capital rules in the country, which it said are the toughest in the globe.

UBS, the world’s largest wealth manager, has set out how it plans to comply with stricter proposed Swiss capital rules that it says can be achieved without boosting overall funding.

The Swiss Federal Council yesterday proposed tougher capital rules for what are designated as “global systemically relevant banks”, which UBS said means that the Swiss capital adequacy regime is the toughest in the world.

The government's proposal sets out a targeted going concern leverage ratio of 5 per cent to qualify as well capitalised, including at least 3.5 per cent common equity Tier 1 (CET1) and up to 1.5 per cent “high-trigger” additional tier 1 (AT1) capital. (The latter term relates to contingent convertible bonds, issued by banks as buffer capital; these “CoCos” can convert to equity contingent on a specific event, such as the equity price falling below a pre-determined level.)

UBS said achieving capital strength has been at the centre of strategy in recent years and it has almost halved its risk-weighted assets and “significantly reduced” the size of its balance sheet over the past four years.

The firm said in a statement that it “intends to meet the newly proposed CET1 leverage ratio requirement of 3.5 per cent by retaining sufficient earnings, while maintaining its commitment to a capital return payout ratio of at least 50 per cent of net profit. UBS will be compliant with the newly proposed rules on a phase-in basis at inception and intends to use the four year period to fully implement the new requirements”.

The bank said it will continue to issue Additional tier 1 capital and total loss absorbing capacity (TLAC) eligible senior debt to meet the new requirement without the need to increase the overall funding necessary.

A number of major banking groups have shrunk their balance sheets, reduced leverage and boosted capital buffers since the 2008 financial crisis, leading a number of them to reduce capital-intensive investment banking and focus more on areas such as wealth management. This week, Credit Suisse, the second-largest Swiss bank, announced a raft of measures to boost overall profitability. Swiss banks have faced the relatively strong headwind in recent months of negative real interest rates in the country and a strong Swiss franc exchange rate against currencies such as the euro.

UBS is due to report third-quarter financial results on 3 November.