UBS considers an exit from Switzerland
Senior leaders have revived discussions about combining with a foreign bank after Swiss regulators voted this week to demand it raise more capital.
UBS has been considering ways to exit Switzerland's regulatory environment, following a setback this week, according to sources familiar with the matter. The Swiss parliament recently approved a law that requires UBS to raise up to $20 billion in capital, a move that executives claim would significantly impact the bank's capacity to lend profitably. UBS CEO Sergio Ermotti expressed his frustration, stating, "We can live with a black eye, but two black eyes and a broken nose is too much."
The Swiss government and UBS have been in a protracted conflict for over a year, with the government now demanding that the bank strengthen its foreign subsidiaries with additional capital. This capital requirement is unfavorable for UBS, as it reduces profit margins and puts the bank at a competitive disadvantage against US banks that have benefited from a deregulatory administration under the Trump presidency.
While a merger appears to be the most viable option for UBS to relocate outside Switzerland, the bank's substantial size, with a $1.7 trillion balance sheet and a $146 billion market value, limits its potential partners. An overseas combination with a major player such as Morgan Stanley, which has long expressed interest in acquiring UBS and its $7 trillion in wealth-management accounts, could provide a dramatic exit.
Additionally, cheaper alternatives like Standard Charter or Deutsche Bank could offer UBS a simplified route to exit the Swiss market.
Written by urgent.news from Semafor's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
