The Swiss lower house committee will review UBS Group AG's (UBS.US) capital requirements in November, as the dispute over a US$16 billion capital shortfall heats up.

An influential Swiss committee said it will take up the capital requirements issue for UBS Group AG (UBS.US) next month, setting the next key date for the country's largest bank. According to a statement released Wednesday, the lower house's Economic Affairs and Taxation Committee plans to conduct a detailed review of the proposal on capital backing for foreign subsidiaries at its meeting on November 23-24, as originally scheduled. UBS Group AG CEO Sergio Ermotti, accompanied by Vice Chairman Markus Ronner, addressed the committee at a closed-door hearing on Monday, indicating the bank is still making ongoing efforts to persuade lawmakers to soften regulatory requirements. Since Credit Suisse's collapse more than three years ago, the Swiss government has been seeking to make its only remaining global bank crisis-resistant. One of the key pillars of its reform agenda is raising equity capital requirements, aimed at ensuring that UBS Group AG's overseas operations cannot drag down its domestic entity. UBS Group AG says the reform will make it uncompetitive. The committee said in its statement: "There is no doubt that the foreign participation capital backing for systemically important banks that require action needs to be strengthened." Last month, the upper house (Council of States) backed a plan largely consistent with what Finance Minister Karin Keller-Sutter has been striving for over the past two years: forcing the country's largest bank to significantly increase the equity capital it holds domestically. If the lower house passes the same proposal as the upper house, it will become law. But if the lower house votes in favor of an alternative, the issue will shuttle back and forth between the two chambers, further prolonging the timeline. UBS Group AG says the capital reform would mean an additional requirement of about US$16 billion in core equity tier 1 (CET1) capital and would make it uncompetitive relative to global peers. The company strongly criticized the upper house's decision and pledged to continue opposing the proposed measure. As the looming capital reform weighs on the bank's share price, the question of whether UBS Group AG will leave Switzerland has been raisedwith some shareholders urging italthough such a move could severely erode its business model built on its Swiss identity.