UBS Group AG: Sell Rating Due to Capital Headwinds and Unattractive ValuationWe highlight our main takeaways. Our view on the shares – remain Underweight. While we think integration is progressing at speed, and earnings are cyclically supported by the current positive market performance and capital market rebound, the potential significant capital headwind (even after mitigating actions) makes valuation unappealing, in our view, relative to European banks: UBS trades on 1.5x 2025 13% ROTE in 2027, on our numbers (after factoring in $10bn more capital, net of mitigating actions). A potential watering down of the proposal would be the main positive catalyst from here, but for now we think uncertainty will likely persist, whereas most peers have better clarity on capital rules, and higher capital distribution. 1. Proposal is not aligned with international standards.