FinNews: UBS considers moving headquarters out of Switzerland amid capital rules clash

Several international news outlets have informed that UBS is seeking to relocate to the US.
UBS is Switzerland’s biggest bank. It is such a huge bank that it is a huge risk for Switzerland. Switzerland has already undertaken two bail-outs before of its biggest banks, UBS and Credit Suisse. Both bail-outs were successful and did not hammer on the tax payer (except the huge risk the taxpyer took for it).
According to specialists, Switzerland would not be able to bail out UBS a second time considering the huge balance sheet of the bank.
Switzerland demands now that the capital of UBS shall be increased – a demand which is not well received by UBS as this would create extra-costs and reduce the bank’s profitability. The bank might not be as attractive for investors and managers – but the bank’s risk would be smaller.
Capital requirements for banks are always controversal matters. On the one hand, banks want to make profits, on the other hand the banks’ clients must be protected. And with huge banks, there is always the question about the risk for the country and the financial system. The capital ratio is the measurement for the bank’s ability to protect the clients, but has an impact on the bank’s profitability. But what is the adequate ratio for countering the systemic risk of a huge bank?
Switzerland demands now that UBS shall increase its capital substantially – the ratio should raise from 14% to 20%. That’s a lot – and a big impact on the bank’s profitability.
For this reason, UBS is seeking to move to the US where the bank would not need to observe such high capital ratios. UBS will be a large US bank, but not a large systemic risk for the US.
It’s a perfect blackmail: either Switzerland accepts UBS’ low capital ratio and a huge risk, or UBS will move abroad – and with UBS will move all investments, taxes, past bail-outs, managers, clients, know-how etc etc …