Share prices, Stoxx 600, FTSE 100 on Friday

Why are UBS shares rallying after the Swiss government proposed tough new capital rules?

JPMorgan analysts might also have the answer to that question.

“Today’s outcome is positive for UBS, based on our initial view, although we need to go through the full set of documents, due to the long timeframe for implementation in our view,” said JPMorgan’s analyst Kian Abouhossein in a note to clients.

Shares of the bank jumped as much as 6% after Switzerland announced highly-anticipated capital regulations calling on UBS to hold an additional $26 billion in Common Equity Tier 1 (CET1) capital.

However, the earliest that regulations will apply in full will be 2033. The law would be finalised by 2027 at the earliest, with six years given to implement the changes.

The Wall Street bank’s analysts said that UBS is expected to generate around $12 billion [per annum] in profits with a dividend of about $3 billion, which means the bank can “fulfill its ‘capital gap’ by 2033+ and still continue with buybacks.”

— Ganesh Rao

Why are UBS shares rallying after the Swiss government proposed tough new capital rules?

Shares of the bank jumped as much as 6% after Switzerland announced highly-anticipated capital regulations calling on UBS to hold an additional $26 billion in Common Equity Tier 1 (CET1) capital.

Johann Scholtz, senior equity analyst at Morningstar, says the proposals are “as bad as it will get for UBS” — but that could give the bank some breathing room to lobby for concessions.

“As we expected, there will be a long phase-out for UBS to deploy this, with the earliest that it will apply in full being 2034,” says Johann Scholtz, senior equity analyst at Morningstar.

“However, negotiations will start immediately,” he added. That means UBS “can now lobby for some concessions and take some actions themselves to mitigate impact, for instance upstream some excess capital from its subsidiaries,” according to the analyst.

— Ganesh Rao

Shares of UBS rose 5.4% after the Swiss government proposed strict new capital regulations which would require the banking giant to hold an additional $26 billion in core capital, following its 2023 takeover of stricken rival Credit Suisse.

The move comes on the heels of a review carried out after the forced merger of Credit Suisse with UBS to avert a full-blown banking crisis in Switzerland.

“The rise in the going-concern requirement needs to be met with up to USD 26 billion of CET1 capital, to allow the AT1 bond holdings to be reduced by around USD 8 billion,” the government said in statement Friday, referring to UBS’ holding of Additional Tier 1 (AT1) bonds.

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— Ganesh Rao

On Thursday, the U.S. Treasury Department added nine economies to a “monitoring list” of trading partners “whose currency practices and macroeconomic policies merit close attention.”

Back in 2020, the U.S. Treasury, under the first Trump administration, labeled Switzerland a currency manipulator, accusing it of deliberately devaluing the Swiss franc against the U.S. dollar. The department stopped short of using the term “currency manipulator” on Thursday.

“The SNB does not engage in any manipulation of the Swiss franc,” the Swiss National Bank said in a statement on Friday. “It does not seek to prevent adjustments in the balance of trade or to gain unfair competitive advantages for the Swiss economy.”

A spokesperson for the SNB noted that it may need to intervene in foreign exchange markets if deemed necessary for the Swiss economy, which recently fell into disinflation as a soaring Swiss franc lowered the cost of imports.

The safe-haven Swiss franc, which has gained around 9.5% against the U.S. currency so far this year, was last seen trading 0.2% lower against the greenback.

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— Chloe Taylor

Stéphane Boujnah, CEO of Euronext, visited the CNBC studio in London this morning to chat to the “Squawk Box Europe” anchors about regional markets.

He said interest in Europe had already started to pick up “before the Trump moment,” but tariffs-induced volatility worsened the trend.

“Many people decided that if you want to have your money in a predictable environment, in a rule of law environment, in an environment where the basic assumption of…