UBS Switzerland Exit
UBS Weighs Moving Operations From Switzerland Amid Tougher Proposed Capital Requirements
Anonymous
UBS is reportedly reconsidering ways to move its headquarters or operations out of Switzerland, potentially through a merger with a foreign bank, as Swiss lawmakers advance tougher capital requirements. Morgan Stanley has been identified as a possible partner, though other banks have also been mentioned. The Swiss proposal would require UBS to back 90% of its foreign subsidiaries with high-quality CET1 capital, tightening rules introduced after the 2023 rescue of Credit Suisse. UBS says the requirement is excessive and could undermine its competitiveness; estimates of the additional capital it might need vary depending on which measures are included. The legislation remains under parliamentary consideration.
Key Points
1
UBS CEO Sergio Ermotti warned of the cumulative impact of the proposed rules: “We can live with a black eye, but two black eyes and a broken nose is too much.”
2
After reports that UBS was considering an exit or merger, the bank’s shares rose by more than 3%.
3
The dispute involves competing proposals: existing rules covered about 60% of foreign subsidiaries, the Swiss government backed a 100% requirement, and UBS favored 50%; a parliamentary committee had also proposed allowing some of the requirement to be met with AT1 capital, subject to a minimum CET1 share.
4
UBS executives argue the capital demands would put the bank at a competitive disadvantage to U.S. banks, whose capital requirements are being eased under the Trump administration.
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