UBS CEO Signals Possible Switzerland Exit Over Capital Demands — 2nd Update

By Michael Hennessey

UBS Group is weighing its ability to compete while based in Switzerland, its chief executive said, as the country edges closer to imposing tougher capital requirements on the bank.

"We are assessing the long-term consequences for our ability to compete out of Switzerland," UBS Chief Executive Sergio Ermotti said on an analyst call Wednesday following third-quarter results. "[Our clients] appreciate Switzerland like we do, but a passport is not enough nowadays."

UBS is caught in a dispute with lawmakers in its home country over proposals to introduce more demanding capital requirements on the group's foreign subsidiaries. The reforms are part of an overhaul of Switzerland's banking rules following the meltdown of Credit Suisse that led to its rescue takeover by UBS.

Options under discussion at UBS include buying a U.S.-based financial institution and relocating, merging with a European rival or selling itself to a U.S. firm, The Wall Street Journal previously reported, citing people familiar with the matter.

Ermotti told analysts that the bank wouldn't rush to make any decisions, and that its top priority was to protect the long-term interests of shareholders, clients and employees.

"We are once more in a critical juncture where the course for the coming decades will be set for the Swiss financial center," Ermotti said.

Under a bill now making its way through the Swiss parliament, UBS would have to add around $16 billion more in equity capital because of the adjustments.

Ermotti said last month's vote for the proposal in the upper house of the Swiss parliament was "very concerning." The measures are set to be voted on at the lower house of the parliament in the coming weeks.

UBS will continue to engage constructively with parliament to seek a solution that supports the country's financial stability without imposing undue costs on its shareholders and hurting its long-term competitive position, he said.

His remarks came as UBS reported a rise in third-quarter net profit, helped by higher inflows to its wealth-management platform from Asia and the Americas.

The Swiss banking group said net profit for the third quarter was $2.69 billion, up from $2.48 billion in the year-earlier period. The figure was lower than analysts' expectations of $2.71 billion, according to consensus estimates compiled by the bank.

UBS said its results got a boost from the addition of $55.1 billion of net new assets in global wealth management, representing a 4.5% annualized growth rate. UBS noted particularly strong inflows in the Asia Pacific region and the Americas.

Revenue grew to $13.35 billion from $12.76 billion. This exceeded expectations of $13.10 billion, according to the same consensus.

UBS said investor sentiment remains measured as the bank enters its fourth quarter. It cautioned for a "more typical sequential seasonal moderation" in transaction volumes across its businesses in the fourth quarter.

The bank expects fourth-quarter net interest income to increase by a low-single-digit percentage sequentially in global wealth management and increase slightly in personal and corporate banking.

UBS said the fourth-quarter performance in the global markets unit might seem weaker by comparison to last year's strong performance, while it expects a sequential rise in global banking revenue.

It expects to end 2026 with a CET1 capital ratio--a measure of a bank's financial strength--at or very close to its target of around 14%, including a possible accrual for the start of its planned 2027 share buyback program. The CET1 ratio was 14.7% at the end of September, compared with 14.8% a year ago.

Write to Michael Hennessey at michael.hennessey@wsj.com

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October 28, 2026 08:04 ET (12:04 GMT)