UBS Exploring Options Abroad in Case Swiss Rules Prove Intolerable, Sources Say

3-line summary

• Beyond relocating its headquarters, UBS is also weighing a merger with another bank, drawing up a list of potential US regional-bank acquisition targets, and even considering scenarios where UBS itself becomes an acquisition target, according to anonymous sources cited by Investing.com. Morgan Stanley was named as a theoretically strong merger fit, partly because UBS Chairman Colm Kelleher spent many years there; no active negotiations are underway, and UBS declined to comment on the speculation.
• At issue are proposed Swiss capital rules requiring 100% CET1 capital backing for foreign subsidiaries, which could lock up more than $20 billion — versus the current 60% requirement; the Swiss Senate has proposed lowering this to 90%, which UBS still considers excessive. A parliamentary committee is set to begin debating the legislation later this month. UBS obtained a US banking license earlier this year and wants to expand its US business; Swiss Finance Minister Karin Keller-Sutter said she considers it unlikely UBS would actually leave Switzerland.

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