UBS weighs leaving Switzerland, but experts remain skeptical

The Wall Street Journal reported on Wednesday that UBS is weighing alternative plans to move its main headquarters out of Switzerland. The report, based on sources familiar with the matter, is linked to the possible tightening of capital requirement rules.

Three options are reportedly under consideration: acquiring a US financial institution and later relocating the headquarters to the United States, merging with a European competitor, or being acquired by an American bank.

At the heart of the tensions is the regulatory overhaul introduced after the collapse of Credit Suisse in 2023. The Council of States has already voted in favor of requiring the Swiss parent company to fully cover its stakes in foreign subsidiaries with high-quality core capital (CET1), instead of the current minimum requirement of 60%. The measure aims to strengthen banks' ability to absorb losses without state intervention. For UBS, this could mean an additional capital requirement estimated at around 20 billion dollars.

UBS considers full coverage disproportionate and damaging to its international competitiveness. US investor Artisan Partners also criticized the new rules as punitive and called for the bank to leave Switzerland; by its estimates, the additional capital required would amount to around 16 billion dollars.

Diverging views within management

Chief executive Sergio Ermotti recently told CNBC that keeping the headquarters in Switzerland would be in the interest of both the national economy and shareholders. Chairman Colm Kelleher, however, warned that the bank could reconsider its presence in the country if the new rules turned out to be too strict, while reaffirming the goal of reaching a compromise.

The debate also concerns the role of AT1 bonds, which can only be written down or converted under certain conditions, unlike CET1 capital, which is immediately available. During the Credit Suisse rescue, around 16 billion francs worth of AT1 bonds were wiped out entirely, triggering legal disputes over the conditions and timing of the writedown.

Experts interviewed by the Wall Street Journal nonetheless consider an actual departure unlikely. Banking expert Simon Amrein points to the advantages of the Swiss financial center: political and economic stability, a strong currency and the availability of skilled staff. A move would also carry risks to reputation and client relationships.

For banking law expert Peter V. Kunz, the "Swiss Banking" brand still holds strong appeal for wealthy international clients, particularly from Asia and South America. In his view, the idea of a relocation would mainly serve as a tool of political pressure. UBS has not commented on the reports.