UBS Weighs Strategy Shift Amid Swiss Capital Requirements: NY Post

UBS executives met with US officials to discuss potential strategies to combat stiffer capital requirements in Switzerland. The bank is considering acquiring a US bank or merging with one, according to the New York Post. CEO Sergio Ermotti previously described the proposed requirements as "very punitive and excessive." UBS has been lobbying the Swiss government to amend the proposals and is exploring moving its headquarters outside of Switzerland if the requirements are not reduced.

UBS executives have met with US officials to explore potential strategies to counter the stricter capital requirements being proposed in Switzerland. The bank is reportedly considering the acquisition or merger with a US-based institution, as reported by the New York Post. CEO Sergio Ermotti has described the proposed measures as "very punitive and excessive," indicating UBS's resistance to the current regulatory environment UBS Announces Assumption of Three Outstanding Credit Suisse ETNs; Rebranding as “ETRACS”^[1].

The Swiss government has been tightening financial regulations following the collapse of Credit Suisse in 2023 and its subsequent acquisition by UBS. The new rules aim to enhance banking stability and prevent future crises. However, these measures have raised concerns about the bank's ability to meet the increased capital requirements, which could amount to US$3 billion as early as next year Swiss lawmakers vote to move ahead on bank capital revamp^[2].

UBS has been lobbying the Swiss government to amend the proposals and is exploring the possibility of moving its headquarters outside Switzerland if the requirements are not reduced. The bank's enlarged size following the acquisition of Credit Suisse has prompted fears that Switzerland may not be able to provide adequate financial support in future crises, leading to demands for an additional US$26 billion in capital Swiss lawmakers vote to move ahead on bank capital revamp^[2].

The proposed changes include updating how banks quantify intangible assets, such as deferred tax assets and in-house software. The Swiss parliament is expected to debate and decide on these measures in 2027, with the new rules taking effect in 2028 or 2029. UBS has acknowledged the decision but noted that the impact of the new capital quality rules is limited compared to the requirements for backing foreign subsidiaries' capital at the parent bank Swiss lawmakers vote to move ahead on bank capital revamp^[2].

UBS's strategic discussions with US officials and its consideration of acquisitions or mergers indicate a proactive approach to navigating the challenging regulatory landscape. The bank's efforts to amend the proposals or relocate its headquarters underscore its commitment to maintaining financial stability and growth.