UBS Group AG is considering moving its headquarters from Switzerland if the country maintains its demand for the bank to hold an additional $25 billion in capital, according to Bloomberg News.

Internal calculations show that this requirement could cause the bank's key capital ratio to rise to approximately 20 per cent from the current 14 per cent in the most severe scenario. UBS executives believe this would make the group uncompetitive compared to global rivals.

The Swiss government and regulators are pushing the country's largest bank to fully deduct the value of its foreign subsidiaries from the parent bank's capital. Officials view this as necessary to prevent another collapse similar to Credit Suisse in 2023.

While Switzerland aims to avoid financial devastation from a potential UBS failure, the bank sees the proposal as an unfair overreaction after it stepped in to rescue Credit Suisse two years ago.

"We will make our case until the last minute in making sure people understand not only the risk we may pose, but also the benefits we create for the country," Sergio Ermotti, UBS chief executive officer, told Bloomberg in January.

UBS now considers the proposal so detrimental that relocating its headquarters might be necessary—not as a threat but because operating with such high capital levels would be commercially impossible. Shareholders would likely apply pressure if the bank accepted capital requirements significantly higher than those in other regions.

The bank is increasing lobbying efforts as the proposal begins its passage through Swiss parliament. A draft is scheduled to go before lawmakers in May, although any changes would likely not be implemented before 2028.

Recently, Swiss financial regulator Finma, the Swiss National Bank, and finance minister Karin Keller-Sutter have reinforced their position that UBS should fully back its foreign units. Finma head Stefan Walter indicated openness to allowing UBS to implement changes over several years.

However, UBS has shown little enthusiasm for a phased approach, as investors typically price in regulatory changes upon announcement, regardless of implementation timeline.

Relocating would be a significant disruption for UBS, whose more than 160-year history is deeply connected to Switzerland. The bank's brand heavily relies on Switzerland's reputation as a safe haven for ultra-wealthy clients.

The Swiss National Bank's vice president, Antoine Martin, stated on Thursday that anything UBS does in response to regulation is "their decision."

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