Press: UBS eyeing the USA to dodge a tightening of the screws in Switzerland
Keystone-SDA
Rumours of UBS moving to the United States have resurfaced, just as the Swiss Senate is due to take up the issue of tightening capital requirements for institutions considered “systemic” in Switzerland on Monday.
Already a dominant player on the Swiss banking scene at the time, Switzerland’s number one bank became even bigger on March 19, 2023 when it took over its failing competitor Credit Suisse, with the blessing of the Swiss authorities.
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The deal created a behemoth housing over five trillion dollars worth of assets, raising fears about the stability of the country’s financial infrastructure in the event of a default.
On June 6, the Swiss government reworked its measures for institutions deemed “too big to fail”, unveiling an arsenal of 31 measures to be implemented over the next 10 years. One of the key measures – and one of the most contested by UBS – will force systemically important banks to fully cover their foreign subsidiaries with hard core capital from the parent bank.
Citing anonymous sources, American media website New York Post reported this weekend External linkthat a UBS delegation led by Chair Colm Kelleher and CEO Sergio Ermotti had recently met with Trump administration officials with a view to a possible transfer of the bank’s headquarters from Zurich to the United States, in return for a takeover of or merger with a local institution.
Medium-sized banks PNC Financial and Bank of New York are frequently cited as potential takeover targets, according to New York Post.
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Is UBS’s ‘deal of the century’ starting to sour?
When questioned by AWP, UBS would neither confirm nor deny the meeting between its senior management and American politicians, nor the bank’s alleged intention to move its headquarters across the Atlantic to avoid the stricter requirements in Switzerland.
The spokeswoman referred to a recent statement by Sergio Ermotti, who said that it was “resolutely premature to comment on any potential scenario, as well as the responses [that the bank will formulate] to truly punitive and excessive demands”.
The management of UBS opposes head-on the so-called ‘lex UBS’ as proposed by the Federal Council at the beginning of June and debated in Parliament during its autumn session.
Irreconcilable positions
The Zurich-based bank “supports in principle most of the Federal Council’s regulatory proposals”, but “strongly disagrees with the extreme increase in capital requirements” announced by the Swiss President Karin Keller-Sutter.
According to the bank’s calculations, and taking into account the target of a CET1 ratio of between 12.5% and 13%, it would need $24 billion (CHF 19.1 billion) in CET1 capital. This amount is in addition to the $18 billion that UBS needs following the acquisition of Credit Suisse in 2023.
Anticipating the reaction of the big bank, Swiss President Keller-Sutter had already indicated when the tightening of the screws was announced that it was not up to the Federal Council to determine the location of UBS’s head office, adding that the threat of a departure was “not new”.
As 10.30 a.m. approached, UBS shares were up 1.7% at CHF32.91, leading the SMI, which was up a marginal 0.06%.
Adapted from French by DeepL/Ac
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