UBS lost its latest battle with Swiss politicians over strict new capital rules, sparking reports it might move abroad or face merger proposals from international rivals. While moving headquarters could be doable, benefits of lighter regulation must be weighed against losing customers who value a Swiss or non-American bank. Any threat to leave may be a negotiating tactic, but executives should also make a positive case.
The idea of UBS decamping might not sway the left-leaning National Council, and doom-mongering could deter clients who read news of disruption. Better for chair Colm Kelleher and CEO Sergio Ermotti to highlight UBS’s benefits to Switzerland: it funds about a quarter of domestic loans and is the country’s third-largest private employer. The bank previously commissioned studies showing how higher capital rules would harm the economy; it should showcase what it could achieve with a compromise.
Looking to JPMorgan Chase’s Jamie Dimon, who complains about regulators but also positions his bank as a national champion, UBS could adapt its approach. Direct US-style lobbying with emotional adverts might backfire in Switzerland’s less tolerant climate. The current strategy is failing, leaving UBS facing rules near its worst-case scenario.
A shift in tone would reduce reputational risk and avoid the embarrassment of either leaving or appearing to make empty threats.
Source: Financial Times Companies · Summarized by HeadlinesBriefing