🧳 Leave, Then

UBS would like everyone to know it owns a suitcase. American suitors are calling and two shareholders are volunteering to help pack. Last month the Swiss upper house voted that UBS must back its foreign subsidiaries with 90% top-quality equity, against 60% today, partly in cheaper paper. (In 2017 FINMA, Switzerland's financial regulator, let Credit Suisse value its own foreign units generously. That went well.) The bank puts the extra bill at about $16B, roughly $33B in total since it swallowed Credit Suisse, and calls it excessive. Sure. It is a lot of money. It is also far less than the $50B-plus of UBS risk Switzerland took onto public books in 2008. (The central bank later made money on it. Nobody knew that in October 2008.) UBS's $1.7T balance sheet is 1.5 times Swiss GDP. A company that size does not have a home country. It has a hostage.

(The letters UBS have officially stood for nothing since the 1998 merger retired the name Union Bank of Switzerland. At the time it was branding. In hindsight it reads like a prenup.) The same murmurs about moving abroad went round in 2009, while the bailout money was still warm. And Cevian, the Swedish activist fund now urging the exit, said in early 2025 that Switzerland was good for UBS and UBS good for Switzerland. Then the government published its capital bill, and by September leaving had become the only realistic option. Switzerland, apparently, stops being good for UBS the day it asks for a receipt.

UBS is playing poker at a table with nobody to bluff (I find this delightful, which says something about my evenings). Washington rewrites capital rules with every new president; Brussels negotiates them for a decade, then dilutes them. Switzerland sends the bill to a lower house committee on 26 October, where the left wants 100%. If parliament softens it, 50,000 signatures put the law to a national vote. A referendum can't write a tougher law, but it can kill a soft one, with the electorate on record against UBS. Polls favour the tougher rules. You can charm 46 senators over lunch. You cannot buy lunch for 5.6M voters.

Look, maybe the Americans are serious. Fine. Picture the destination: a bank worth $155B on the stock market, next to Morgan Stanley at $280B, trading a predictable regulator for a friendlier one that may not survive the next election. In Zurich, UBS is the country's financial identity. In New York, it would be PaineWebber (the US broker it bought in 2000) with a nice accent. The Swiss business, the part nobody in New York is calling about, stays here either way. The new rules phase in over 7 years. Credit Suisse died over a weekend.