US investment firm Artisan Partners has urged UBS to consider leaving Switzerland as the country moves toward tougher capital requirements for the bank. Artisan said the proposed rules could require UBS to hold billions of dollars more in capital, reducing the amount available to generate returns for shareholders.
The development adds to an ongoing debate over how Switzerland should regulate its largest bank following the 2023 collapse of Credit Suisse. UBS has said it intends to continue operating as a global bank from Switzerland while pushing for rules that it considers targeted and internationally aligned.
Artisan Calls for a Change in UBS’s Swiss Base
Artisan Partners, a major UBS investor, said in a letter to the bank’s board that Switzerland had become a less attractive location for the lender because of the proposed capital rules.
The firm’s Global Value and International Value teams said they manage more than 60 million UBS shares. Artisan argued that the additional capital requirements could tie up funds that otherwise could be used to support the bank’s business or generate shareholder returns.
The investor therefore called on UBS to examine the possibility of changing its domicile rather than continuing under what it views as a costly regulatory structure.
Tougher Capital Rules Follow Credit Suisse Collapse
The dispute is linked to Switzerland’s banking reforms following Credit Suisse’s collapse in 2023 and its subsequent takeover by UBS.
Switzerland’s upper house of parliament recently backed a proposal requiring UBS to support its foreign subsidiaries with 90% Common Equity Tier 1, or CET1, capital. The lower house still has to consider the proposal, meaning the rules have not yet been finalized.
UBS has criticized the proposed requirements as excessive. The bank has argued that stricter rules could affect its ability to compete internationally.
UBS Says It Plans to Remain in Switzerland
Despite the pressure from Artisan, UBS has reiterated that its objective is to continue operating successfully from Switzerland.
The bank said it would protect shareholder interests while continuing to provide analysis during the parliamentary process. UBS has also called for regulation that is proportionate and consistent with international standards.
UBS Chairman Colm Kelleher had previously warned that excessively strict regulation could make the bank reconsider its future in Switzerland.
Artisan Estimates Higher Capital Requirements
Artisan estimates that the proposed rules could increase UBS’s CET1 capital requirement from about $56 billion to $72 billion. The investor argues that the additional $16 billion could otherwise be deployed to generate returns.
Artisan also calculated that the capital could produce around $2.4 billion in annual net income under its assumptions. It linked this potential earnings impact to a possible reduction in the bank’s market value. These figures are Artisan’s estimates rather than an independent forecast.
Switzerland’s Banking Rules Remain Under Debate
The disagreement between UBS and some of its investors highlights the broader challenge facing Switzerland as it strengthens oversight of major banks.
The government and lawmakers are seeking stronger safeguards after the Credit Suisse crisis, while UBS and some investors have raised concerns about the cost and international competitiveness of the proposed requirements. Swiss business groups have also previously argued that excessive regulation could affect the country’s financial sector.
UBS Faces a Key Decision Over Its Swiss Future
Artisan Partners’ call adds new pressure to the debate over UBS’s future in Switzerland. While the investor is urging the bank to consider relocating, UBS continues to state that it wants to operate globally from Switzerland. The final capital requirements will depend on the remaining parliamentary process and could influence UBS’s strategy, capital allocation and relationship with investors.
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