Swiss banking giant UBS continues to inch toward moving its headquarters to the US, a drastic and historic move that’s borne of outsize regulatory burdens in its home country – and aggressive wooing from the Trump administration, On The Money has learned.
The latest sign that Switzerland’s biggest bank is on the way out of its home of 162 years came Monday, when it applied for a US national bank charter. UBS has a strong wealth management unit here and could offer many more services through its brokerage arm. That, in turn, could expand UBS’ US footprint well beyond the nearly 6,000 advisers already here.
CEO Sergio Ermotti and chairman Colm Kelleher have said they are planning other moves to expand in the US, although at least publicly, they have attempted to play down making US the home of a bank that literally has its country of origin in its name.
But privately, bank officials have been laying the groundwork for what would be one of the most radical shifts in strategy by any large multi-national bank in decades. As On The Money previously reported, UBS execs have recently met with Trump administration officials to prepare for moves that could include the purchase of a US bank or a merger, according to people close to the matter.
Sources inside the bank tell On The Money that senior bankers are alerting the troops that a move is almost inevitable given the costs associated with staying in Switzerland and the relative ease with which the Trump administration is promising such a move to the US.
At the heart of UBS’s plans to bolt from its long-time homebase are new Swiss capital requirements that would force the bank to increase the size of its cushion against losses by $26 billion — a staggering sum that the bank believes will make it impossible to compete globally.
But as a Bloomberg piece recently pointed out, the price tag for staying in Switzerland doesn’t end there. UBS is the Swiss version of a “too big to fail” US bank – think JP Morgan or BofA here in the US. That means it can’t go under; regulators would step in and provide aid and backup lines of credit to weather any liquidity crisis.
Here in the US, so-called TBTF banks are coddled with lower borrowing costs, and with the Trump administration, less stringent regulations. Not so in Switzerland. In 2023, the Swiss government all but forced it to take over its troubled rival Credit Suisse. UBS has been paying the price ever since.
For instance, UBS wants to write down losses on $16 billion in Credit Suisse bonds that went bad. Sounds reasonable since the government handed it the liability. But on Wednesday a Swiss court said the writedown is illegal, setting up a costly court fight.
There are other Credit Suisse costs too numerous to cite in this piece. That’s on top of the regulatory charges the Swiss believe are needed to prevent another CS debacle. Sources at UBS’s US operations point to these issues as the reason why wealth advisers have been bolting from the firm. To make the numbers work, the Swiss have been squeezing payouts to big producers causing an exodus of some of the firm’s biggest money makers, On The Money has learned.
Some people in the White House and inside UBS believe a move to the US is a no brainer. The Trump administration hasn’t been bashful about letting companies domiciled overseas that the US is friendly terrain to do business and re-establish their headquarters.
When asked about its efforts to woo UBS, a Treasury Department official just last month confirmed it, saying “This is what we want.”
One way to come to the US is to do a deal. With a market value of $121 billion, UBS could team up with any number of midsized banks and not be burdened by the so-called deposit cap placed on US banks when they seek to expand through acquisitions because its retail banking operations here are relatively small with just under $100 billion in deposits.
By contrast, JPMorgan Chase, the largest US bank, has $2.5 trillion deposits thus it is barred from making a major acquisition because it would exceed the cap and control more than 10% of total bank deposits.
A UBS rep had no immediate comment.
This story originally appeared on NYPost
