UBS Considers U.S. Headquarters Relocation
UBS is mulling over the possibility of moving its headquarters to the United States and has had discussions with the Trump administration regarding this. It seems like a familiar story, doesn’t it?
This new development was reported by the Financial Times this week, just two months after a similar piece appeared in On the Money. What’s intriguing here is that if past events are any indication—and if my sources are right—it suggests that UBS likely won’t be making any major moves just yet.
As previously noted, UBS is quite frustrated with the extensive regulations imposed by the Swiss government, especially the latest capital requirements which are, frankly, much stricter than what’s expected from U.S. banks.
Switzerland’s major banks believe they’ve made significant sacrifices for their country by taking over Credit Suisse, despite the costs involved. They feel that this situation is compromising Switzerland’s ability to compete internationally against banks like JPMorgan.
Back in September, UBS executives met with officials from President Trump’s Treasury Department to discuss this potential move. This was the same meeting that FT confirmed recently.
However, there’s a saying in journalism about news outlets chasing stories that have already moved on, and that might very well apply here.
At the moment, UBS is leaning towards remaining in Switzerland for a few reasons, according to my sources. UBS Chairman Colm Kelleher and CEO Sergio Ermotti understand that relocating to the U.S. would mean substantially scaling back their operations in Switzerland.
If UBS continues to function as a U.S. bank while maintaining large operations in Geneva, they’re likely to face an overwhelming amount of regulatory issues. Some executives believe that establishing a base in the U.S. would mean sacrificing everything they’ve built over the past 162 years as a leading European bank.
An executive from a major U.S. bank mentioned, “The Swiss would find their lives unbearable. If Mr. Kelleher and Mr. Ermotti think they’re too heavily regulated now, they should wait until they set up shop in New York.”
So, what are these talks with the Trump administration all about? It seems that the president views this as a negotiation.
The aim here appears to be to reverse the new capital requirements, which Swiss banks argue would compel them to increase their loss cushions by a staggering $26 billion.
Revealing these developments would alert the government that, while UBS might not shift its headquarters from Geneva, it could expand significantly within the U.S. The bank already has a strong presence, especially in its securities division, boasting about 6,000 wealth advisors recognized as among the best on Wall Street.
This division includes PaineWebber, a once-prominent American investment bank and brokerage. I covered this story back in the late 2000s, when UBS acquired a mid-sized investment bank led by talented Wall Street executives Joe Grano and Don Maron.
The $10.8 billion deal is often viewed as one of the most successful banking mergers. It’s expected that Kelleher and Ermotti will aim to acquire a brokerage firm or a smaller investment bank to bolster their U.S. operations rather than completely relocating from Geneva or relinquishing any Swiss business subject to government restrictions.
Additionally, they will likely continue to share insights about the so-called withdrawal, something the Trump administration seems keen to highlight as a vote of confidence in the U.S. financial sector. In fact, a Trump official recently pointed out that such negotiations are quite desirable.
UBS has chosen to remain tight-lipped on the matter.
