Artisan Partners urges UBS to leave Switzerland over 90% capital rule

Investor demands relocation

Milwaukee-based asset manager Artisan Partners has formally requested that UBS Group AG reconsider its corporate domicile and relocate its headquarters outside Switzerland. In a letter sent to the UBS board of directors late on Wednesday, the firm argued that proposed Swiss banking regulations would destroy shareholder value by forcing the lender to lock up billions in unproductive capital. Artisan manages more than 60 million shares in UBS, representing a 1.8% stake valued at nearly £3 billion, which places it among the bank's top 20 shareholders according to LSEG Workspace data. The asset manager has held shares in UBS since 2015 and joins Cevian Capital, which holds an approximate 1.4% stake, in publicly questioning whether the bank can viably remain Swiss.

“The simple fact is that Switzerland is no longer an attractive or desirable location for UBS.”

Financial toll of the capital requirements

The asset manager calculated that the regulatory changes would require UBS to hold an additional $16 billion in Common Equity Tier 1 (CET1) capital, pushing its total requirement from $56 billion to $72 billion. Artisan argued that this extra equity would generate zero return for shareholders under the revised regulatory framework. Without the tougher mandates, the investor projected that the $16 billion could generate an annual return of approximately 15%, translating to $2.4 billion in additional net income. Based on a valuation multiple of 15 times earnings, Artisan stated that the lost value equals roughly $36 billion, or approximately 23% of UBS's total market capitalization.

Current CET1 capital56

Proposed CET1 capital72

Current CET1 capital

56 $B

Proposed CET1 capital

72 $B

Data from the article text

“Aside from the temporary friction and cost of changing domicile, there is no compelling reason for UBS to remain a Swiss company.”

Legislative battle and bank response

The regulatory overhaul follows the collapse and state-sponsored rescue of Credit Suisse in 2023. The Swiss federal government initially proposed requiring UBS to back 100% of the value of its foreign subsidiaries with CET1 capital, the most expensive type of equity. In August, an upper house committee suggested a compromise to cover 50% with CET1 and 50% with cheaper Additional Tier 1 (AT1) debt. However, the full upper house voted to reject that softer proposal, approving instead a 90% CET1 requirement that moves closer to the government's initial plan. The legislative proposal now heads to the lower house of the Swiss parliament for further debate.

UBS responded by confirming its commitment to remain based in Zurich while continuing to advocate for proportionate regulatory outcomes. The bank stated that its goal is to continue operating successfully as a global bank from Switzerland, protecting shareholder interests through targeted and internationally aligned rules. Before the upper house voted on the 90% threshold, UBS Chairman Colm Kelleher warned that unduly harsh regulation could force the bank to reconsider its future in the country. Following weekend media reports of foreign banks expressing interest in combinations with UBS, Swiss Finance Minister Karin Keller-Sutter stated that she considered a departure of the bank from Switzerland unlikely.