Switzerland’s biggest bank says new rules at home could push it abroad.
UBS, one of the world’s most powerful wealth managers, has warned it might no longer keep its headquarters in Zurich.
That came after the Swiss Government unveiled stricter capital requirements following the 2023 collapse of Credit Suisse. The measures are meant to protect taxpayers but have triggered open resistance from UBS, which said they could make it uncompetitive.
” The requirements, as they are [proposed], are very punitive and excessive and therefore we will need to think how we protect our shareholders’ and stakeholders’ interests”, UBS Group CEO said in a press statement UBS sent to Brussels Signal September 17.
“But it’s definitely too early to jump on commenting any potential scenario and what our responses will be”, he added.
The new rules would force systemically important banks to fully cover their foreign subsidiaries with capital from the parent bank. That would mean UBS setting aside tens of billions of dollars to meet the requirement.
Bloomberg reported yesterday that the package could raise its capital needs by as much as $26 billion (€21.9 billion).
The government wants UBS to hold capital equal to 100 per cent of the risks taken by its foreign branches. On top of that, accounting changes to items such as in-house software and tax assets could add another $3 billion (€2.5 billion).
UBS has described the plan as “punitive and excessive”.
According to Swissinfo yesterday, rumours have already surfaced that senior executives met US officials to discuss a possible relocation to the US, potentially linked to a merger with a local bank.
UBS has declined to confirm the talks but has not denied them. Names mentioned included PNC Financial and Bank of New York as possible takeover partners,.
The mood inside the Swiss bank is described as tense. UBS leaders are said to feel let down by Swiss politics, Finews, a Swiss media outlet specialised in finance, wrote yesterday.
Seniors recall being assured, when they agreed to take over Credit Suisse in 2023, that the deal would not leave them worse off, it reported.
Fewer than two years later, they face demands they argue could undermine their position against rivals abroad. Insiders quoted by Finews went as far as saying it is “two minutes to midnight” in the debate inside the boardroom, showing how seriously a departure is now considered.
The political climate has added to the strain. Finance minister Karin Keller-Sutter has insisted it was “not up to the Federal Council to determine the location of UBS’s head office” and noted that such threats were not new.
At the same time, Switzerland’s largest party, the Swiss People’s Party, has voiced opposition to significantly higher capital demands, leaving the outcome uncertain as parliament begins its debates.
The consequences for Switzerland should the lender leave would be far-reaching.
Tax revenues for the federal government, cantons and municipalities would shrink. Thousands of highly paid jobs in Zurich could disappear. Smaller businesses, which rely on UBS for credit, might also struggle to secure financing.
Observers have warned that the reputational damage would be “immense”. The Swiss loan book at UBS amounts to some 350 billion Swiss francs (€375 billion) and analysts say neither regional banks nor foreign institutions could fill the gap if it pulled back.
For now, UBS has started lobbying while parliament prepares to debate the law.
Bloomberg noted the legislative process could take years, giving the bank time to press its case.
The turbulence around UBS comes as Britain faces its own financial strains.
The Times reported yesterday that international investors have pulled out of UK equities at the fastest pace in two decades, with some even treating the country as if it were an “emerging market”.
Analysts blamed weak productivity, stubborn inflation and rising debt, leaving the UK something of an outlier in Europe
