UBS Should Quit Switzerland Over Capital Rule, Investor Says

(Bloomberg) — UBS Group AG shareholder Artisan Partners urged the Swiss bank to leave the country, saying the lender faces a “grim reality” with stricter capital rules.

“The simple fact is that Switzerland is no longer an attractive or desirable location for UBS,” Artisan Partners portfolio managers including Daniel O’Keefe wrote in a letter to UBS’s board on Wednesday.

Artisan Partners said it collectively manages more than 60 million UBS shares on behalf of clients, or about 1.8% of UBS’s total shares outstanding.

Earlier this month, Switzerland’s upper house of parliament, or Council of States, unexpectedly backed a plan that the bank has said will require an additional $16 billion in CET1 capital. The next round moves to the lower house where the plan could yet be watered down, and a decision is unlikely before next year.

“As we have consistently stated, our goal is to continue operating successfully as a global bank from Switzerland,” a UBS spokesperson said in a statement. “UBS will protect the interests of its shareholders by continuing to contribute facts and analysis to support informed decision-making and advocating for regulation that is truly targeted, proportionate and internationally aligned, and addresses the root causes of the Credit Suisse crisis.”

Artisan Partners estimated that the move could amount to around $36 billion of forgone market capitalization, according to the letter. If the bank were to be located in a jurisdiction with rules similar to Switzerland’s current regulation, that capital could be put to work to generate a 15% return, they said.

Artisan Partners has previously lobbied for strategic change at other Swiss companies such as Novartis AG.

(Updates with UBS statement in fifth paragraph.)

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