UBS weighs options as Switzerland considers tougher capital rules
The reported contingency plans include moving its headquarters, merging with a European rival or selling to a US bank.
Key takeaways
- WSJ reported UBS is preparing options if Switzerland tightens capital requirements.
- A government plan could require UBS to hold an extra US$20 billion in capital.
- UBS management has said it prefers to remain in Switzerland.
UBS is preparing contingency plans that could include moving its headquarters out of Switzerland if lawmakers tighten capital rules, the Wall Street Journal reported, citing people familiar with the matter. The reported options also include buying a US financial institution and relocating, merging with a European rival, or selling to a US bank.
Switzerland is considering tougher capital requirements after UBS rescued Credit Suisse in 2023. Under the government plan, UBS would need to hold an extra US$20 billion in Common Equity Tier 1 capital, including by fully backing its foreign units with that capital. The current requirement is at least 60 per cent.
UBS has argued that the proposed 100 per cent requirement is excessive and would hurt its international competitiveness. Reuters said it could not immediately verify the WSJ report; UBS declined to comment.
US investor Artisan Partners urged UBS to leave Switzerland earlier this month, calling the planned requirements “punitive.” The firm estimated the changes could require an additional US$16 billion in common equity capital.
UBS Chief Executive Sergio Ermotti said last week that staying in Switzerland was good for the economy and shareholders. Chairman Colm Kelleher said last month the bank would need to assess its future there if rules became too strict, while expressing a preference for a compromise that would let it stay.
This article was produced with the help of AI technology. Based on reporting by the outlets listed above.
