Driver 1: the one-big-bank financial centre

The capital decision

No question will shape the Zurich financial centre of 2035 more than the future of UBS. Since the emergency merger of March 2023, described in Chapter G.V, Zurich has been home to a single global bank whose balance sheet exceeds the Swiss economy. Chapter G.VI followed the reform of the too-big-to-fail regime to its most recent step. On 23 September 2026 the Council of States decided that foreign participations should be backed by Common Equity Tier 1 capital at a rate of 90 per cent, below the full backing that the Federal Council had proposed. UBS responded on the same day that the outcome was “not a compromise” and failed to address the root causes of the Credit Suisse collapse. By its own calculation the decision would require about USD 16 billion of additional CET1 capital for foreign participations. Together with ordinance-level measures and the requirements triggered by the acquisition, the total would reach about USD 33 billion of incremental capital since 2023.¹

The authorities see the matter differently. In its Financial Stability Report 2026 the Swiss National Bank supported the Federal Council’s proposals and stated that the risks of foreign participations were not adequately covered by the existing regime. Its Vice Chairman argued that, taking the transitional period into account, UBS could meet the requirement and still distribute profits to its shareholders. The SNB, FINMA and the International Monetary Fund all endorsed full capital backing, while UBS called the central bank’s analysis misleading.² The bill now goes to the National Council. Whatever the final figure, it will define the economics of the bank for the entire period covered by this chapter.

The relocation question

The capital debate has revived a question that no one in Zurich asked seriously before 2023: whether the bank might leave. Reports that UBS was weighing a merger that would allow it to move its seat out of Switzerland resurfaced on 24 September 2026, the day after the vote in the Council of States. Market commentators treated the report with caution, noting that relocation talk had in the past served mainly as leverage in negotiations over capital.³ Two days later the finance minister, Karin Keller-Sutter, called a move “unlikely”. She argued that leaving would be far more costly and legally more complex than meeting the requirements. A relocated UBS would also cease to be a Swiss bank, although its model rested on Switzerland, on “Swissness” and on the rule of law.⁴

For scenario purposes, three outcomes must be distinguished. In the first, UBS accepts the final capital rules, adjusts its capital distribution and remains in Zurich as a global wealth manager with a Swiss universal bank and a reduced investment bank. In the second, it stays but shrinks its foreign exposure, sells or separates parts of its American or Asian business and becomes a smaller, more Swiss institution. In the third, it moves its holding company abroad through a merger or redomiciliation and leaves a Swiss subsidiary under FINMA supervision. The legal obstacles to the third outcome are considerable, since the Swiss systemically important bank would remain subject to Swiss requirements and emergency planning. Its reputational cost for the bank would also be high. The possibility can nonetheless no longer be excluded and therefore belongs to the set of critical uncertainties.

The domestic banking system

The one-big-bank centre is only part of the picture. Chapter D.V described how the Zürcher Kantonalbank has grown into one of the largest Swiss banks under a full state guarantee, and Chapter G.IV recorded its designation as systemically important in 2013. Raiffeisen and PostFinance share that status. Around these institutions stand the regional banks, the private banks and the foreign banks, which together provide competition in lending and wealth management that the disappearance of Credit Suisse has made more valuable. The Swiss Bankers Association noted that other bank groups added staff in 2025 while total banking employment fell because of the UBS restructuring.⁵ The SNB observed in 2026 that domestically focused banks had seen a slight fall in profitability in 2025 because of lower Swiss interest rates. It also found persistent vulnerabilities in the residential mortgage market, although household finances mitigate them.⁶

The domestic banks thus form a predetermined element with a secure base in mortgage lending, savings and the payment system. They cannot replace a global bank in capital markets, foreign exchange, large corporate finance or the custody of international wealth, although they can absorb some of its Swiss business. A scenario in which UBS shrinks or leaves would therefore alter above all the character of the centre. Zurich would remain a large banking location for Swiss clients and a wealth management centre, but the global investment banking capabilities built since the Bankverein’s acquisitions of the 1990s, described in Chapter G.I, would largely move elsewhere.

Notes

1. UBS, “UBS statement on decision by Swiss Parliament’s upper house on banking regulation”, 23 September 2026, https://www.ubs.com/global/en/media/display-page-ndp/en-20260923-banking-regulation.html. ↩
2. SWI swissinfo.ch, “UBS has enough capital to meet government demands, SNB says”, June 2026, https://www.swissinfo.ch/eng/ubs-has-enough-capital-to-meet-government-demands%2c-snb-says/91685342. The article notes that implementation of the requirement would extend until 2035. ↩
3. Newsquawk, “UBS (UBSG SW) is once again weighing a merger to relocate out of Switzerland, Semafor reports”, 24 September 2026, https://www.newsquawk.com/headlines/ubs-ubsg-sw-is-once-again-weighing-a-merger-to-relocate-out-of-switzerland-semafor-reports. ↩
4. SWI swissinfo.ch, “Swiss finance minister downplays talk of UBS relocation”, 26 September 2026, https://www.swissinfo.ch/eng/swiss-industry/keller-sutter-it-is-unlikely-that-ubs-will-relocate-abroad/92123855. The same report notes that speculation about a possible combination with Morgan Stanley lifted the UBS share price by 3.5 per cent. ↩
5. Plattform J, “Erstmals 10 Billionen erreicht” (cited above). ↩
6. Swiss National Bank, Financial Stability Report 2026, landing page, https://www.snb.ch/en/particular/landing-pages/fsb-2026. ↩

For general information only. This article does not constitute legal or tax advice, does not replace advice on an individual case and creates no lawyer-client relationship. It reflects the legal position as of September 2025.