UBS exploring options abroad if Swiss rules prove intolerable, sources say
UBS•UBS is weighing scenarios including moving its headquarters or merging with another bank if Switzerland imposes rules it considers excessively strict. The proposed rules could require UBS to back foreign units with 90% of their capital using common equity, down from the government’s proposed 100%.
1. Options under review
UBS is considering a possible headquarters shift or merger if it deems Switzerland’s proposed banking rules excessively strict, three people familiar with the matter said. Options include identifying smaller U.S. banks it could buy and considering the possibility of a takeover of UBS itself; there are no active talks, the sources said.
2. Capital requirements
The Swiss government’s proposal would require UBS to back foreign units with 100% Common Equity Tier 1 capital, which could tie up more than $20 billion. The upper house reduced the requirement to 90%, which UBS also considers excessively high and harmful to its international competitiveness. Currently, 60% capitalisation is required, and some of it can be met with cheaper capital.
3. UBS says it wants to stay
UBS said it does not comment on speculation and has repeatedly stated that it wishes to remain Swiss. Morgan Stanley was described by people familiar with UBS’s thinking as the best theoretical merger match, but no talks are active. UBS Chairman Colm Kelleher said last month the bank might need to consider its future in Switzerland if the rules were too harsh.
