ZURICH, March 16 (Reuters) - UBS may have

gained a potential advantage in a long battle over Swiss

government plans to raise its capital requirements, some

lawmakers said, after a parliamentary filing showed the proposal

has been assigned to its upper house first.

If the government's bill begins there it is more likely to

be softened than in the lower chamber, the lawmakers said. That

could help set the tone for what is expected to be a long

legislative process for the bill.

The Swiss upper house's Economic Affairs and Taxation

Committee is set to discuss the matter on May 4, after the

government publishes its proposed banking regulation bill, a

move expected before the end of April.

Other rules at the so-called ordinance level will be enacted

directly by the government and are expected to come into force

in 2027.

The law determines how much capital UBS has to hold at home

for its subsidiaries abroad. The government has proposed 100%,

up from currently 60%, which the bank has said will hurt its

competitiveness and with it, Switzerland's financial sector.

Three members of the upper house committee, along with a

fourth lawmaker from the lower house, in December pitched a

compromise on capital, which could allow UBS to partially back

foreign subsidiaries with so-called AT1 bonds rather than more

expensive Common Equity Tier 1 capital.

UBS at the time called the compromise "more constructive"

than the government's approach.

Separate rules for banks that are deemed "too big to fail"

will be sent to a public consultation later this year.