Keller-Sutter Calls UBS's Bluff: Leaving Switzerland Would Cost More Than the Capital Rules

Switzerland's finance minister has publicly called UBS's bluff. In an interview with CH Media published Saturday, Karin Keller-Sutter said it was unlikely the bank would leave its Swiss base over this week's parliamentary vote for tougher capital rules — arguing that a relocation would be more expensive than complying and legally complicated.

The interview is a direct answer to nine days of escalating pressure from the bank. On Sept. 17, UBS chairman Colm Kelleher warned at a banking event in St. Gallen that the bank could rethink its Swiss domicile if the rules became too harsh to compete. "Our number one aim is to have a Swiss compromise that allows us to stay in Switzerland, prosper in Switzerland, be of value to the Swiss economy, and for the Swiss economy to benefit from us. It's a very high bar for us," he said. "However, clearly, if we're in a position where we cannot compete, then we have to think about that." Keller-Sutter's Saturday message: the threat is empty.

The minister's message

UBS "went all out," Keller-Sutter told CH Media — the bank, in her telling, had lobbied furiously because it assumed it would get its way in parliament. The government, she said, had already made compromises with the bank. UBS, in comments earlier this week, rejected that notion, according to Reuters' account of the exchange.

On the relocation question itself, the minister was blunt: moving would cost more than the new capital rules and would be legally complicated. She did not detail what makes a move legally complicated, and the full interview text was not independently available — but the political signal is unmistakable. The one piece of leverage UBS has been brandishing is being priced, in public, as a bluff.

The vote that started it

Wednesday's vote in the Council of States, parliament's upper house, went 29–16 in favor of requiring UBS to back its foreign units with 90% CET1 capital. The chamber rejected both the softer option — an upper-house committee compromise that would have let UBS use 50% CET1 and 50% AT1 hybrid debt — and, narrowly, the government's own 100% CET1 plan.

The capital-rules bill now moves to the lower house, with a final decision expected at the end of this year at the earliest — more likely in 2027. The vote went further than many political analysts had expected. "People are thoroughly fed up. It wasn't a vote of conviction, it was about fear of their own voters," Cedric Wermuth, co-leader of the Social Democrats, told Reuters. Centre-party lawmaker Pirmin Bischof said Credit Suisse's downfall made it vital to ensure it could never happen again.

The institutional weight behind the tougher line is considerable: the Swiss National Bank and regulator FINMA both backed the government's 100% plan, and the current baseline — at least 60% backing of foreign units, not limited to CET1 — is widely seen as inadequate after the Credit Suisse collapse. UBS's lobbying campaign, meanwhile, "appeared to have alienated both lawmakers and authorities," in the words of Zurich PR consultant Klaus Stoehlker. The lower house is "viewed by many analysts as a bigger hurdle for UBS," Reuters reported.

Ermotti's week of warnings

The bank spent the week before the vote making its case in public. In the Neue Zuercher Zeitung on Monday, CEO Sergio Ermotti said: "We can live with a black eye, but two black eyes and a broken nose is too much. Yet that's exactly what the demand for capital backing of 90% or 100% comes down to."

At a Zurich event on Tuesday, Keller-Sutter and Ermotti faced off directly. The minister called 100% CET1 backing the best way to protect taxpayers; her SNB-backed proposal, she said, would make shareholders rather than taxpayers liable for losses, and she called the 90% upper-house proposal "close to the government's submission." Ermotti rejected both as unacceptable, arguing UBS is not only a risk to the economy but a benefit to it: "We are very concerned that this would make us uncompetitive and ultimately call into question the sustainability of the business model." He added: "Over the coming weeks and months, we will shape the future of the financial center for the next 10 to 20 years."

After the vote, Ermotti called the 90% plan "no real compromise" and urged support for the AT1 option. In parliament on Wednesday, Keller-Sutter had a sharper line: "UBS does not deny that it has the necessary funds for this capital build-up," she said, adding the capital could be used "to strengthen the Swiss parent bank, as the Federal Council wants. Or in favour of shareholders in the form of dividend payouts and buybacks of shares." (Her remarks were reported by SWI swissinfo.) UBS's own statement after the vote said the decision "disregarded serious concerns expressed by business representatives, employee associations and most Swiss cantons."

What 90% CET1 backing actually means

Stripped of the politics, the rule is a plumbing requirement. UBS's foreign subsidiaries would have to be capitalized so that 90% of that backing is CET1 — ordinary shareholder equity and retained earnings, the highest-quality, first-loss-absorbing capital — held at the Swiss parent level. The bank's preferred 50/50 mix would have let it use AT1 instruments, hybrid bonds that write down or convert in a crisis and are cheaper to hold.

The purpose is the specific lesson of Credit Suisse: foreign units that can be wound down in a crisis without dragging the parent into the wreckage. The current baseline is at least 60% backing, not limited to CET1; the government asked for 100%; the committee offered 50/50; the chamber settled at 90%. And the cost logic is straightforward: capital parked as CET1 is the most expensive form — it compresses leverage by design, drags on return on equity unless earnings rise, and can crowd out buybacks and dividends. UBS's own second-quarter release explicitly ties future buybacks to maintaining CET1 around 14% and the outcome of the parliamentary deliberations.

The price tag

UBS estimates the approved 90% measure would require roughly $18 billion in additional capital, per Reuters' Saturday piece. The bank's own assessment, carried by Bloomberg, put the figure at about $16 billion of additional CET1 at the parent; Goldman Sachs and Citigroup estimated around $17 billion. The estimates are attributed per-source here rather than blended — they measure slightly different things. The $23 billion figure the government floated in 2025 was explicitly theoretical — Keller-Sutter herself cautioned then that the numbers could be significantly lower.

The 50/50 AT1 alternative the bank wanted would have cost roughly $13 billion versus about $18 billion under the 90% rule. And Citi, in a note carried by Dow Jones on Sept. 24, argued the real burden is smaller still: about $8 billion to actually raise over a seven-year transition once excess capital is accounted for — "manageable," in Citi's word. UBS shares fell 1.5% on the note. (A day earlier the shares had risen about 1% to 40.78 Swiss francs as of 0851 GMT on Sept. 23 — both time-stamped intraday prints, not closes.)

The bank can point to genuine strength: second-quarter 2026 net profit of $2.8 billion ($5.8 billion for the first half), a CET1 capital ratio of 14.4% at end-June, return on CET1 of 15.4%, and $7.3 trillion in invested assets, per its own ad hoc announcement.

What comes next

The bill now goes to the lower house, where the fight resumes — and where analysts see a bigger hurdle for UBS. A final decision is expected at the end of this year at the earliest, more likely in 2027, with a seven-year transition period under discussion.

That timeline is the most important fact in the story. The credible frame is not "UBS flees Switzerland" but both sides negotiating through the press while the real decision sits a year away. Keller-Sutter's Saturday interview is best read as the government's opening position for that negotiation: the relocation threat is priced as empty, the compromises are described as already made, and the 90% line is "close to the government's submission."

What remains unknown: the full wording of the CH Media interview was not independently available; what exactly would make a relocation "legally complicated" was not detailed in any source seen; and no date has been set for the lower-house debate. The next real decision point is parliament's lower chamber — and UBS's only leverage, the threat Kelleher voiced in St. Gallen, has just been called a bluff by the minister holding the pen.