ST. GALLEN - UBS chairman Colm Kelleher said on Thursday that the bank would have to think about its future in Switzerland if new capital rules left it unable to compete. He was speaking at a banking event in St. Gallen on the same day the Council of States postponed its vote on those rules until next Wednesday.
Asked about reports that UBS might consider moving its headquarters, Kelleher said the first aim is a Swiss compromise: to stay, to prosper, and to be of value to the economy. He called that a very high bar. If the bank cannot compete, he said, it has to think about that.
The capital bill UBS says it can live with
Under the government plan, UBS would hold about $20 billion more Common Equity Tier 1 capital, mainly because foreign units would have to be 100 percent backed by CET1. Today those units must be at least 60 percent backed, largely with the same kind of capital. UBS says 100 percent is excessive and would hurt it against rivals abroad.
An upper-house committee agreed in late August that foreign subsidiaries could be backed 50 percent with CET1 and 50 percent with Additional Tier 1 capital, which costs less. UBS says that version would still cost about $13 billion. Kelleher said he was not happy about the extra cost, but the bank could live with the AT1 compromise. UBS has already put in $15 billion of extra capital since it bought Credit Suisse.
We will pay more, but it has to be proportionate and internationally aligned.
Kelleher said that when he agreed the Credit Suisse deal in 2023, his understanding was that UBS would not be in this position. His shareholders, he added, had understood the same.
Why Wednesday's Senate vote was delayed
The Council of States had been due to vote on Thursday. The debate ran so long that the sitting was adjourned until 23 September. The government and Swiss regulators have questioned whether the AT1 compromise would work in a crisis. Several members of the Liberals, the Swiss People's Party and the Centre Party spoke instead for a 90 percent CET1 rule, stricter than the committee text and slightly softer than the government's.
Lawmakers have already dropped the idea of leaving today's capital rules unchanged. Every live option raises the requirement. The Senate's choice will go to the National Council, and a finished law is unlikely before next year. The argument Keller-Sutter opened on 1 September is in our earlier capital-rules report. How the central bank reads the same file is in the SNB and UBS review.