UBS is looking to move its HQ to the US, and the Swiss banking giant has spoken to the Trump administration about it. Sound familiar?
That’s what the Financial Times reported this week – exactly two months after On The Money broke the story. The funny thing is, if history is any guide (and if my sources are to be believed), the repeat headline is an indication that UBS isn’t going anywhere anytime soon.
As On The Money reported earlier, UBS hates all the regulation being heaped on by the Swiss government, including some recent, more onerous capital requirements that far exceed what any US bank needs to hold.
The big Swiss bank feels that it did its country a big favor taking over the ill-fated Credit Suisse and integrating the thing into its operations while eating many of the costs. It also feels that its government is jeopardizing its ability to compete globally with the likes of JPMorgan.
In September, we first reported, top UBS officials met with President Trump’s Treasury Department to explore such a move. (This was the same meeting confirmed by the FT earlier this week.)
Yet there’s an adage in journalism that when outlets get around to reporting something late that’s in their own backyard, they’re literally chasing a story that has moved on. And that’s exactly what I’m hearing is the case here.
As of now, UBS is leaning toward keeping its HQ in Switzerland – and for a few simple reasons, my sources say. UBS Chairman Colm Kelleher and CEO Sergio Ermotti know that to domicile the bank in the US, they would literally have to give up their vast operations in Switzerland.
UBS would face an avalanche of regulations and harassment by local authorities if it remained as a US bank and continued its large business presence in Geneva. To move to the US would be to relinquish everything it created as Europe’s premier banker over the past 162 years, bank executives say.
“The Swiss will make their lives unbearable, which is why they aren’t leaving,” said one top executive at a major US bank. “If Kelleher and Ermotti think the regulation on them is tough now, wait until they set up shop in NYC.”
So what is UBS doing by meeting with the Trump administration, as we first reported in September and the FT is revisiting now? Something our president likes to call “negotiation.”
This entire dance is to force the Swiss to back off the new capital requirements that the bank says would force it to increase the size of its cushion against losses by a staggering $26 billion.
Leaking these stories puts the government on notice that while UBS may not move its HQ out of Geneva, it can vastly increase its US footprint. The big bank already has a formidable presence in the US; its brokerage division of about 6,000 wealth advisers is considered one of Wall Street’s best.
It comprises what used to be called PaineWebber, the once formidable US investment bank and brokerage firm. I actually reported the story back in late 2000 when UBS purchased the mid-size investment bank run by two of Wall Street’s most capable executives, Joe Grano and Don Marron.
The $10.8 billion deal is widely regarded as among the most successful bank mergers ever. Wall Street sources expect that rather than leave Geneva and all that Swiss business the government would throttle if they set up their HQ here, Kelleher and Ermotti will buy a brokerage firm or a small investment bank to beef up their US operations.
They will also continue to leak stuff about leaving, which the Trump administration has no problem confirming, casting it as a show of confidence in the US financial system. One Trump official did so unabashedly months ago, pointing out to On The Money that such negotiations with foreign companies “is what we want.”
A UBS rep declined comment.
