UBS weighs relocation as Swiss parliament pushes stricter offshore capital rules
UBS is evaluating a possible move out of Switzerland after lawmakers propose requiring its offshore units to be funded almost entirely with high-quality equity.
Swiss legislators are set to vote on a proposal that would require UBS’s offshore operations to be capitalised at 90 percent with common equity tier-one, translating into roughly $US16 billion of new equity and possibly an extra $US2 billion from other measures. UBS warns that the added capital would erode shareholder payouts and make the bank less competitive with peers in the United States and Asia-Pacific. The push follows historic bailouts of UBS after the 2008 crisis and of Credit Suisse during a later banking run, both of which exposed the risks of under-capitalised overseas activities.
Finance minister Karin Keller-Sutter, who helped negotiate the Credit Suisse takeover, argues the legislation should ensure that banks, not taxpayers, bear foreign-market risks. In response, UBS is reportedly considering options ranging from moving its domicile to the United States, splitting domestic and offshore units, or seeking a merger with another major bank.
Why it matters
The outcome will shape UBS’s structure, its global competitiveness, and the extent of taxpayer exposure to banking risks.
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