Swiss regulators would love the landlocked nation’s crown jewel bank, UBS, to ditch its US subsidiary – and Wall Street tongues are wagging that it finally could happen, On The Money has learned.
It’s not the first time speculation has swirled that UBS Americas — which combines a middling investment bank with a strong high-net worth brokerage operation — could be a takeover candidate. Wall Street wealth management heavyweights such as Morgan Stanley and Bank of America’s Merrill Lynch would love to get their hands on its 6,000 brokers who manage something like $2.4 trillion in assets.
It also isn’t the first time that UBS has been rumored to do something transformational. As On The Money reported back in November of last year, UBS Chairman Colm Kelleher and CEO Sergio Ermotti have been chafing over new rules from Swiss regulators that would force them to hold an additional $16 billion in capital.
They are said to have considered moving the 164-year-old bank to the US, with executives meeting with the Trump administration about it. Another option is buying a US bank so they can change countries via an acquisition.
Both would be difficult for a lot of reasons including the fact that UBS is the biggest in Switzerland and it is known as its high-end private banking clientele that the Swiss government — which rules its banks with an iron fist — probably doesn’t want to be managed out of New York.
A more elegant solution would be for the Swiss to keep their in-country private bank and spin off of the US operations, which I am told by my sources inside the bank, is something that the Swiss government banking regulators would love. The reason: The Swiss are control freaks and hate risk and they see US banks as being powder kegs of risk ever since the 2008 financial crisis.
“They would love to get rid of us,” said one senior UBS America’s employee who asked not to be named. “The Swiss see us as a big basket of risk and would be thrilled if we could find a buyer.”
UBS sale rumors are nothing new. In fact the whole conversation began in 2023, when the Swiss government all but forced it to take over its troubled rival Credit Suisse over losses that were tied to what regulators would consider risky investment banking activities as opposed to more staid and stable private banking.
What followed was enhanced capital requirements, a way of neutering capital markets risk-taking by bankers and, in theory, preventing another potential Credit Suisse situation. Since then UBS has been trying to convince the country’s regulators to lay off, but it appears the Swiss are now going to press ahead with the capital rules that will make it impossible to compete with less regulated US brokerages.
The irony, of course, is that UBS Americas is best known for its brokerage business aka “wealth management,” which is maybe the most staid and stable banking line. US brokerages operate mostly on a fee-based basis; the old stock broker model of churning client accounts through heavy trading has been replaced by fees on assets under management from rich people that brokers invest in various products.
That’s why if UBS did indeed spin off its Americas unit there would be buyers. One name that has been whispered inside the firm, On The Money has learned, has recently been Morgan Stanley, already among the nation’s top brokerage 16,000 financial advisers.
It’s unclear if CEO Ted Pick is ready for a major acquisition that would cost close to $150 billion. That said, there would be tremendous cost cutting of back office and other support staff, which could make the numbers work, and it’s hard to see the Trump administration with its free market approach to mergers putting up much of an antitrust stink. Since these are Wall Street firms as opposed to banks, you don’t have to worry about rules that cap the size of deposits at any one institution.
A rep for UBS said: “We don’t comment on speculation or views expressed on such matters.” I am told Ermotti has said in the past that “shrinking is not an option.”
Reps for Morgan Stanley had no immediate comment.