Swiss government assesses UBS relocation options amid capital rules dispute

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UBS relocation under review

Highlights

Swiss finance ministry assessed relocating UBS to the U.S. or UK in response to proposed capital rules requiring up to $18 billion in extra CET1 capital.
Internal Swiss government analysis finds U.S. or UK relocations would not materially reduce capital requirements for UBS, with U.S. double leverage rules absorbing similar amounts.
Swiss parliament is debating whether to require UBS to hold 90% or 100% CET1 capital for foreign subsidiaries, with detailed discussions resuming in November ahead of a potential December vote.

Assessment weighs U.S. and UK structures

As reported by Reuters, Switzerland's finance ministry says it has examined possible arrangements for UBS to relocate in light of the Federal Council's proposed capital measures, including at the request of a parliamentary committee overseeing banking rules.

The Zurich-based lender faces stricter regulation under rules being crafted after the 2023 collapse of Credit Suisse, which could require UBS to find about $18 billion in additional Common Equity Tier 1 capital. The ministry says the relevant authorities view the proposed measure as effective, targeted, proportionate and manageable for UBS.

An internal government assessment reviewed by Reuters finds that a move to the U.S., one of the main options under consideration, would not be straightforward even if UBS could avoid the full effect of some new rules. Under a flat holding structure typical for U.S.-domiciled banks, UBS units would be held directly by the holding company, unlike in Switzerland.

The document says double leverage and clean holding restrictions in the United States would in effect absorb about the same amount of capital as fully capitalising both domestic and foreign units. It adds that if U.S. authorities accepted UBS's current parent bank structure after a move, some relief on the capital treatment of subsidiaries could be feasible.

If UBS moved to Britain, the assessment says it would face slightly softer rules on foreign subsidiaries, while the UK can at times grant waivers. But UBS would also need to hold additional capital for its Swiss operations because that business would carry a much higher risk weighting than it currently does as a domestic investment.

The assessment concludes that it is difficult to make a serious quantitative analysis of the potential changes. It does not specifically address relocation through a merger, a precautionary scenario the bank is examining, and it does not explore the wider economic effect on Switzerland if UBS were to leave.

Capital debate raises economic and political stakes

UBS says the planned rules would damage its competitiveness, and Chairman Colm Kelleher has hinted the bank could consider its future in Switzerland if the measures are too severe. Chief Executive Sergio Ermotti says this week that UBS is assessing its ability to compete from Switzerland, but is in no rush because any new rules will take time to implement.

Swiss Finance Minister Karin Keller-Sutter says last month that UBS is unlikely to leave because such a move would be more expensive than the new capital rules and legally complex. UBS says only that it does not comment on speculation or views expressed on such matters.

UBS is Switzerland's last remaining global bank, and its role in the domestic economy is significant. The holding company paid around $1 billion in taxes in 2025, according to the group's financial statements, while banks are the largest corporate taxpayers in Zurich, official data show.

An employee group warns that as many as 12,000 of about 34,000 UBS jobs in Switzerland could be at risk if the rules prompt a relocation. Officials and the bank remain at odds over proposals that would require UBS to back foreign subsidiaries fully with Common Equity Tier 1 capital.

Parliament is still shaping the final framework. The upper house last month approved a moderated 90% CET1 target instead of full 100% backing, and a lower house committee this week begins debating the rules and asks the government for clarifications before detailed discussions resume in November and a possible vote in December.

Our earlier article on UBS Global Wealth Management’s Fed outlook explained why the bank expects a longer U.S. tightening cycle, with additional rate hikes projected in December and March 2027 as inflation pressures prove persistent. It highlighted how stronger goods and services inflation—alongside risks such as AI-driven demand and supply disruptions—could keep policy restrictive for longer, shaping expectations for higher borrowing costs and tighter financial conditions.

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