Swiss lawmakers advanced a proposal that UBS says could add $16 billion to its parent-bank common equity Tier 1 (CET1) requirement. The Federal Reserve also proposed reserve and capital rules for payment stablecoin issuers.

In New Zealand, TSB’s review of its capital and liquidity reporting comes ahead of a proposed merger. Singapore and European data showed substantial bank buffers, while European central banks questioned whether stablecoin reserves should be required to sit in bank deposits.

Read more on the week’s key developments.

1. Swiss upper house advances capital proposal affecting UBS

Switzerland’s Council of States backed a requirement on 23 September for banks to back 90% of the carrying value of their foreign participations at the Swiss parent with CET1 capital. UBS estimates that the measure would require about $16 billion in additional CET1 at UBS AG if enacted. Its cumulative estimate of $33 billion also includes $2 billion from earlier measures and $15 billion under existing requirements following the Credit Suisse acquisition. The proposal now goes to the National Council.

The proposed $16 billion increase concerns capital held at the Swiss parent against its foreign participations. More equity there would increase the parent’s capacity to absorb losses from overseas subsidiaries, while leaving less capital available for other uses, including distributions. The $33 billion figure combines existing and prospective requirements. The National Council’s decision and any transition arrangements will determine whether, and how quickly, UBS must meet the proposed increase.

2. Fed proposes reserve and capital rules for payment stablecoin issuers

The Federal Reserve proposed on 24 September that payment stablecoin issuers under its supervision fully back outstanding tokens with eligible reserve assets and maintain separate capital. One operational-risk component would charge 2% against the first $20 billion of outstanding stablecoins, with lower marginal rates at larger volumes and additional capital components. A banking parent would deconsolidate its issuer subsidiary for regulatory capital purposes and deduct the subsidiary’s minimum required capital from its own CET1. The proposals are open for comment.

Full reserve backing would not remove the need for an issuer to absorb operational and other covered losses. The parent deduction would prevent capital from being counted twice. For banks considering issuance, returns would depend on reserve income and fees relative to operating costs and capital committed at both the issuer and its parent. The calibration and treatment of subsidiaries remain subject to consultation.

3. TSB commissions review of capital and liquidity reporting before proposed merger

New Zealand’s TSB said on 25 September that it had identified issues in aspects of its capital and liquidity ratio calculations and reporting. Following a notice from the Reserve Bank of New Zealand on 18 September, TSB appointed Deloitte to provide independent assurance on its compliance with prudential requirements. A draft report is due at the end of October and a final report in November. TSB reported NZD 9.5 billion ($5.4 billion) in assets at March 2026 and said it remained well capitalised, with sound liquidity and funding.

The review must establish whether the errors concern reporting alone or change the measures used to demonstrate compliance. That distinction also bears on Heartland Bank’s proposed acquisition and merger with TSB. Heartland shareholders are due to vote on 30 September, but regulatory approvals and a material adverse change condition remain outstanding. Heartland has said findings materially different from what is currently known could prevent completion even after a favourable vote.

4. Singapore stress test projects bank capital above requirements

The Monetary Authority of Singapore (MAS) reported in its 22 September Financial Stability Review that domestic systemically important banks had an aggregate CET1 ratio of 15.9% at June 2026. Under a three-year adverse scenario, MAS projects a trough of 10.9% in the second year, above the combined 9% CET1 minimum and capital conservation buffer. Each bank remains above its individual minimum CET1 requirement in the exercise.

The scenario combines an AI-related market correction, tighter financial conditions and a prolonged Singapore recession. Weaker borrowers and lower collateral recoveries increase projected impairments and risk-weighted assets. The finding that each bank remains above its minimum adds information that the aggregate ratio alone cannot provide. These are modelled outcomes. Credit migration, collateral values and provisioning will determine how closely actual losses follow the scenario.

5. Fed revises instructions on supervisory intervention and remediation

The Federal Reserve replaced its April supervisory operating principles on 24 September, drawing on preliminary findings from the independent review of Silicon Valley Bank’s failure. The revised instructions emphasise prompt action on significant vulnerabilities and regular escalation of uncertain issues to Reserve Bank leaders. They also generally allow examiners to rely on satisfactory internal-audit validation when closing a remediated deficiency, rather than repeating that work themselves.

For supervised banks, the question is whether the instructions lead to earlier demands to address interest-rate exposure, concentrated deposits and other material weaknesses. Earlier remediation could reduce the risk that funding withdrawals force asset sales and crystallise losses. Reliance on internal audit may also shorten the time needed to close a finding, making the quality of its validation more consequential. The instructions impose no numerical capital increase. The timing and specificity of future remediation demands will show whether supervisory practice has changed.

6. European banks retain strong buffers as liquid-asset mix changes

The European Banking Authority (EBA) reported on 25 September that EU and European Economic Area banks’ aggregate CET1 ratio was 16.1% in the second quarter of 2026, down from 16.2% as risk-weighted assets rose. Average CET1 headroom above regulatory requirements was about 430 basis points. Within high-quality liquid assets, sovereign-bond holdings rose 8.7% in the first half of 2026 while cash balances declined.

The figures support aggregate resilience at the reporting date, while the change in liquid-asset composition merits attention. Government securities carry duration and spread sensitivity that cash does not, although the exposure depends on maturity, hedging and accounting treatment. Banks’ sovereign concentrations and the market value of their liquidity portfolios therefore matter alongside headline liquidity ratios. The second-quarter snapshot cannot establish conditions at the end of September.

7. Basel monitoring estimates a 2.2% rise in required Tier 1 capital

The Basel Committee’s monitoring exercise, published on 23 September, estimated that full implementation of the final Basel III standards would increase large internationally active banks’ minimum required Tier 1 capital by 2.2%. The previous estimate was 1.7%, with the committee attributing most of the increase to a larger sample. The 2.2% is a relative increase in required capital, not a 2.2-percentage-point rise in CET1 ratios. The exercise uses banks’ positions at the end of 2025 rather than forecasting their responses to the rules.

The output floor, which limits reductions in risk-weighted assets from banks’ internal models, and revised market-risk requirements are the main contributors. Estimated increases vary across the sample, at 0.8% for European banks, 1.2% for banks in the Americas and 3.6% for banks in the rest of the world. Portfolio composition and national implementation will determine the requirement facing an individual bank.

8. Agricultural Bank of China issues RMB 50 billion in Tier 2 notes

Agricultural Bank of China completed a RMB 50 billion ($7.4 billion) issue of ten-year Tier 2 notes on 24 September. The notes carry a 1.81% coupon and a conditional redemption right after five years. At June 2026, the bank reported a CET1 ratio of 10.80% and a total capital ratio of 17.50%. It has separately proposed an A-share issue of up to RMB 160 billion ($23.8 billion), with net proceeds intended to replenish CET1, subject to approvals and completion.

ABC’s risk-weighted assets rose 5.9% in the first half of 2026, faster than the 3.3% increase in its net CET1 capital. That helps explain the proposed share issue: although its net CET1 capital increased, the bank’s CET1 ratio declined as its balance sheet grew. The completed Tier 2 sale addresses another part of its capital needs while the equity proposal remains pending.

9. mBank completes first euro AT1 issue by a Polish bank

Poland’s mBank completed a EUR 250 million ($284 million) additional Tier 1 (AT1) issue on 22 September, which it describes as the first euro-denominated AT1 transaction by a Polish bank. The perpetual bonds carry a 6.625% initial coupon and are callable after five years subject to regulatory approval. The terms provide for a temporary write-down of principal if a specified trigger occurs. Orders reached seven times the issue size after pricing tightened by 50 basis points. At June 2026, mBank had over PLN 300 billion ($77.8 billion) in assets.

After selling zloty AT1 to institutional investors in 2024, mBank has now found buyers for this form of capital in the euro market. It plans to more than double the value of its capital markets transactions in 2026–30 compared with 2020–25, making its ability to return to international investors more consequential.

10. European central banks seek to replace stablecoin deposit minimums

The European System of Central Banks recommended on 22 September that minimum bank-deposit holdings in reserves backing asset-referenced and e-money tokens be replaced with minimum shares of assets maturing within one and five working days. Under the EU’s Markets in Crypto-Assets Regulation, issuers currently must hold at least 30% of reserves as bank deposits, rising to 60% for significant tokens. The recommendation forms part of a review of the regulation and does not change the current rules.

Stablecoin redemptions can prompt issuers to withdraw large deposits from the banks holding their reserves. Allowing other short-term liquid assets could reduce that dependence while changing where reserve funds are invested. Replacing dispersed retail balances with large issuer deposits can weaken a bank’s funding stability even if its total deposits initially remain similar. Banks receiving those deposits must therefore assess their concentration and withdrawal sensitivity. The Commission’s response and any eventual changes to reserve-asset rules will determine the effect.