Swiss Officials Weigh the Costs of a UBS Relocation Abroad

Swiss officials have studied whether UBS could escape tougher capital rules by moving abroad.

An internal finance ministry review, reported by Reuters, found that a move to the US or Britain could prove as costly as the Swiss plans.

According to the ministry, a parliamentary committee requested part of this work.

It added that the authorities consider the plan effective, targeted and proportionate. In their view, it is also manageable for UBS. The bank said it does not comment on speculation.

The Swiss rules follow the collapse of Credit Suisse in 2023. Under the government’s proposal, UBS would have to back its foreign units in full with CET1 capital.

In September, the upper house lowered this target slightly to 90%. Both levels are well above what the bank must hold today.

The US is seen as a leading option, but the review suggests a move there would be difficult.

US banks typically hold their units directly through the parent company.

Under US limits on parent-level debt and liabilities, this would need about as much capital as fully backing all UBS units.

Some relief would be possible if the US accepted the bank’s current parent structure. The review also warned that US rules could shift sharply under a new government.

In comparison, Britain applies slightly softer rules to foreign units. However, UBS would need more capital for its Swiss business, which UK rules would give a much heavier risk weighting than it has now.

The review found these changes hard to measure precisely. Meanwhile, a lower house committee began reviewing the rules this week, with a vote possible in December.

Featured image: Edited by Fintech News Switzerland, based on image by Mohammad Ayaz Alam via pexels.

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