UBS CEO Sergio Ermotti stated in an interview on September 20 that the bank might reconsider its future in Switzerland due to proposed capital regulations. The Swiss upper parliament is scheduled to vote on these rules around September 23.
The government's initial proposal requires UBS to hold $20 billion in additional Common Equity Tier 1 (CET1) capital to cover foreign subsidiaries. Ermotti described these requirements as overly strict compared to international standards, potentially harming the bank's competitiveness.
A parliamentary committee proposed a compromise allowing UBS to cover half of the requirement using Additional Tier 1 (AT1) bonds. Under this scenario, the bank would need to raise $13 billion in additional capital instead of the full $20 billion.
The difference between the two proposals amounts to approximately $7 billion. This gap could impact the bank's return on equity, dividend payouts, and share buyback programs. Chairman Colm Kelleher also indicated that the bank might re-evaluate its presence in the country.
The regulatory discussions follow the 2023 collapse of Credit Suisse and its acquisition by UBS. The uncertainty surrounding these rules has reportedly led to a potential revision of the timeline for Sergio Ermotti's tenure as CEO.
