The Economic Affairs and Taxation Committee of the Swiss upper house voted 10-2, with one abstention, to recommend that UBS Group AG be allowed to use AT1 convertible debt for up to 50% of the additional capital requirement imposed by the Swiss government, provided the instruments are reformed. ^[1] The Council of States' Economic Affairs Committee voted 10 to 2 to require UBS to support its foreign subsidiaries with 50% Common Equity Tier 1 capital. ^[2] UBS stock fell 2.6% to trade at CHF 43.12 after the Council of States' Economic Affairs Committee in Switzerland delivered a ruling on the bank's capital requirements. ^[3] Joseph Dickerson and Theo Massing, analysts at Jefferies, said in a note that the committee's decision represents a materially softer approach that would give UBS more flexibility in meeting the Swiss government's demand to back foreign subsidiaries. ^[4] The Swiss government has been pursuing a capital requirement hike of around $20 billion for UBS Group AG, as part of its reform agenda following the collapse of Credit Suisse, to ensure UBS's foreign businesses cannot sink its domestic entity. ^[5] UBS Group AG executives have argued that the capital requirement increase would make the bank uncompetitive. ^[6] The committee permitted the remaining 50% of capital requirements for foreign subsidiaries to be covered by redesigned Additional Tier 1 bonds. ^[7] The committee's decision represented a compromise that fell short of the Federal Council's more stringent 100% Common Equity Tier 1 demand. ^[8]