By Ariane Luthi and Oliver Hirt

ZURICH, Dec 5 (Reuters) – The Swiss government is set to soften part of a banking regulation package that could force UBS to add as much as $24 billion in capital, three people familiar with the matter said.

The government is preparing to water down some of the rules it has direct control over, two of the sources said, speaking on the condition of anonymity because of the sensitivity of the matter.

Those regulations relate to the valuation of deferred tax assets and software, among others, which would amount to about $11 billion of the total extra capital UBS could need to hold. It is not clear how significantly the government will soften them.

Weakening the proposed rules would be a boost for UBS, which has said repeatedly that the wealth manager and Sw

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