UBS reportedly mulls moving headquarters from Switzerland if capital rules tighten
UBS•UBS is reportedly preparing contingency plans that could include moving its headquarters from Switzerland if lawmakers tighten capital requirements. The options reportedly include acquiring a U.S. financial institution and relocating, merging with a European rival, or selling itself to a U.S. bank.
1. Contingency plans
UBS is preparing options that could include moving its headquarters out of Switzerland if lawmakers tighten capital requirements, people familiar with the matter were reported to have said. The options include acquiring a U.S. financial institution and relocating, merging with a European rival, or selling itself to a U.S. bank.
2. Proposed capital rules
Switzerland is considering tougher “too-big-to-fail” capital rules following UBS’s 2023 rescue of Credit Suisse. Under the government plan, UBS would need to hold an extra $20 billion in Common Equity Tier 1 capital, mainly by requiring its foreign units to be fully backed by CET1 capital, up from the current requirement of at least 60%. UBS has said the proposed 100% requirement is excessive and would hurt its international competitiveness.
3. Debate over relocation
Artisan Partners urged UBS earlier this month to leave Switzerland, estimating the proposed changes could require an additional $16 billion in common equity capital. CEO Sergio Ermotti said last week that staying in Switzerland was good for the economy and shareholders. Chairman Colm Kelleher said last month that UBS would need to consider its future in Switzerland if new rules became too stringent, while saying the preferred outcome was a compromise that would allow it to stay.
