The Swiss banking powerhouse UBS is on a significant path to establishing its headquarters in the United States. This decision comes amid heavy regulatory challenges in Switzerland and strong advocacy from the former Trump administration, as outlined by On the Money.
The most recent indication of UBS’s departure from its home of 162 years surfaced on Monday when the bank applied to create a national bank in the U.S. With a robust asset management division, UBS sees potential to broaden its services via its securities division. This could expand their U.S. footprint well beyond the current 6,000 advisors.
CEO Sergio Ermotti and Chairman Colm Kelleher have mentioned their intent to further grow in the U.S., though they’re attempting to keep things a bit understated regarding the possibility of making the U.S. the future headquarters for the bank that carries its name.
However, behind the scenes, bank officials are laying the groundwork for what could be a monumental strategic shift for a major multinational bank in years. As previously reported, UBS leaders have recently engaged with officials from the Trump administration to discuss potential acquisitions or mergers with U.S. banks, according to sources familiar with these developments.
Inside UBS, some executives have indicated to staff that relocating is almost certain, primarily due to the high costs tied to remaining in Switzerland versus the more favorable conditions offered by the Trump administration in the U.S.
One of the driving factors behind UBS’s shift from its traditional base involves Switzerland’s new capital requirements. This regulation demands an increase in the bank’s financial buffer by $26 billion, which UBS believes creates an impossible competitive landscape globally.
Yet, as a recent Bloomberg article highlighted, the costs of remaining in Switzerland extend beyond this. UBS, akin to national banking giants like JP Morgan in the U.S., is categorized as “too big to fail,” meaning it essentially cannot collapse without government intervention during financial crises.
In the U.S., large banks benefit from lower borrowing costs and less stringent regulations, a stark contrast to the Swiss landscape. For example, in 2023, the Swiss government almost mandated a takeover of Credit Suisse due to its financial struggles, leaving UBS to deal with the aftereffects.
This predicament is evident as UBS evaluates losses on $16 billion of Credit Suisse corporate bonds that deteriorated in value. It seems reasonable, considering the government’s responsibility for management. But just this past Wednesday, a Swiss court ruled the write-down illegal, leading to a costly legal struggle.
The challenges stemming from Credit Suisse are numerous and contribute to the regulatory pressures UBS faces, which many believe are driving valuable wealth advisors away from the company. The tightening financial environment in Switzerland has led to reduced compensation for top performers, which further complicates staffing issues, as reported by On the Money.
There’s a general belief among some in the White House and at UBS that transitioning to the U.S. should be straightforward. The Trump administration has openly encouraged companies to set up shop overseas, citing the favorable conditions the U.S. offers for business.
Treasury officials recently acknowledged their desire to attract UBS to the United States, stating simply, “This is what we want.”
Finding a path to the U.S. could involve strategic partnerships. With a market valuation of $121 billion, UBS could collaborate with several midsize banks without the deposit cap restrictions that U.S. banks encounter during acquisitions. Given UBS’s relatively modest retail banking presence, with deposits below $100 billion, this flexibility could work in their favor.
In comparison, JPMorgan Chase, the largest bank in the U.S., holds $2.5 trillion in deposits and faces limits on acquisitions due to these caps, which prevent it from exceeding a 10% share of total bank deposits.
Representatives for UBS were unavailable for comment at the time.
