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The bank has received approaches from potential U.S. deal partners as it publicly spars with Swiss politicians over substantially higher capital requirements

Executives at UBS UBS -1.46%decrease; down pointing triangle, Switzerland’s last remaining flagship global bank, are preparing for a once unimaginable move—ditching its Swiss home base.

People at the bank and their advisers are mapping out contingency plans should Swiss lawmakers proceed with tougher capital requirements under the country’s too-big-to-fail banking laws. The measures are a response to UBS having to rescue Credit Suisse three years ago, according to people familiar with the bank’s efforts.

It could mean a future in which UBS—the country’s financial behemoth and a major driver of its economy—is run from a headquarters far from the cobblestone streets of Zurich.

Options under discussion include buying a U.S.-based financial institution and relocating, merging with a European rival or selling itself to a U.S. firm seeking its well-heeled clientele, the people familiar with the matter said.

A move from Zurich would diminish the Swiss-ness of a bank that serves as the country’s financial standard-bearer. Switzerland’s cultural identity is wrapped up in its historic role as a place that provides discretion and a haven for the wealth of the global elite.

The possible departure of UBS has plunged Switzerland into its latest existential crisis over how much it wants finance to define its economic identity. The country wants UBS to hold substantial new capital against its large foreign operations, an increase UBS estimates would cost around $16 billion under the legislation before Parliament. Polls in the country show support for the increases.

Finance Minister Karin Keller-Sutter, who has led the charge to impose the higher capital requirements, said that it would cost UBS more to leave than to stay and that she didn’t think the bank would leave.

“UBS wants to be a global bank, and people in Switzerland would like it to be the local player for the mom-and-pop shop, and be the local savings bank,” said Stefan Legge, a professor, and head of tax and trade policy at the University of St. Gallen. “We are watching a game of chicken. Who chickens out first?”

Switzerland’s household wealth, among the highest in the world, is bolstered by the presence of some of the world’s largest companies. Global homegrown champions reinforce the country’s image as a nation of just nine million people that punches above its weight. UBS traces its history to 1862 and briefly became the world’s second-largest bank by assets when Union Bank of Switzerland and Swiss Bank Corporation merged to form the modern institution in 1998.

Swiss lawmakers say tougher measures are needed to guard against a banking collapse that could trigger a sovereign crisis. The existing laws were written after UBS needed a bailout of more than $50 billion following its exposure to toxic U.S. mortgages in 2008, but they weren’t fully enforced and proved to be of little help when Credit Suisse was heading toward its 2023 collapse.

The combination of the two large lenders has only revived fears that Switzerland could face further bailouts. UBS’s $1.7 trillion in assets amounts to around 150% of Swiss economic output, compared with 15% of U.S. GDP for the biggest American bank.

While UBS and the government publicly sparred over the legislation in recent months, UBS received approaches from potential U.S. partners about possible deals, some of the people said. They cautioned that the bank isn’t in active talks and hasn’t taken any formal steps toward a deal.

There are no guarantees UBS will proceed with any deal and some have suggested the bank is posturing in a last-ditch effort to persuade lawmakers to alter their plans, which still require parliamentary approval that is expected in the coming months. It could also just decide to stay. Under the current proposal, the bank would have seven years to phase in the higher capital requirements.

Two outside UBS shareholders, Cevian Capital and Artisan Partners, are pushing for a move.

Even if the bank moves its headquarters, UBS could retain its domestic Swiss business or potentially spin it off to shareholders or outside investors. It doesn’t break down the overall size of its Swiss business, but in its lobbying materials it said it lends about $417 billion to Swiss companies and households and generates around one-third of its revenue there.

Colm Kelleher, the former Morgan Stanley president who has chaired UBS’s board since 2022, is increasingly in favor of exploring a deal, some of the people said. His mandate when he joined was to scale up UBS in the U.S. and increase its value in the eyes of bank investors.

One of the people likened Kelleher’s strategy to playing hard-nosed poker with Swiss authorities, rather than simply bluffing.

A move would be a bitter pill for the bank’s chief executive, Sergio Ermotti. A Swiss national, he returned to UBS in 2023 to guide it through the emergency purchase of rival Credit Suisse. He spoke of a sense of national duty in accepting the role at the height of the crisis.

But faced with the government’s determination to increase the bank’s capital requirements, he has softened his stance on the importance of maintaining a Swiss financial champion, those people said.

Both men have said they want to keep running a global UBS from Switzerland, but that there might come a point when that isn’t possible. A person familiar with the bank’s thinking said the chairman and CEO are fully aligned on the issue.

Speculation about a deal involving UBS has run rampant. Potential partners cited by analysts include Morgan Stanley and U.S. regional banks. In 2019, The Wall Street Journal reported that UBS and Deutsche Bank had explored ways to combine their businesses. Any deal likely would have to bring in more U.S. wealth clients, or provide new ways to reach them, people close to UBS said.

UBS shares are up this year but have lagged behind their international peers, a factor that investors attribute to the debate over capital. The bank has a market value of around $155 billion, below that of American rivals Morgan Stanley, at $280 billion, and Goldman Sachs, at around $260 billion.

UBS is best known in the U.S. for its wealth business, which includes the former PaineWebber adviser network, as well as its investment bank, which ranks among the top 10 and trades equities and advises companies on stock and bond deals.

UBS bills itself as the bank for billionaires and serves hundreds of thousands of American millionaires. It is the largest wealth manager in Asia and a force in the Middle East and other growing wealth markets.

Analysts have cautioned that UBS has to consider how U.S. banking regulation might evolve over time.

“Firms are like plants,” said Legge, the professor. “You can take them and plant them somewhere else, but will they grow there?”

Investors demand big discounts against regional peers to reflect troubled public finances and looming presidential election

French stocks are lagging their European peers by the widest margin since 2010, as investors demand steep discounts to reflect the country’s challenged public finances and a looming presidential election.

The benchmark Cac 40 index has tumbled since early August as a brutal sell-off in the country’s government bonds, sparked by nerves about debt sustainability, spilled into other assets. French stocks are down 3 per cent in 2026 so far, while the region-wide Stoxx Europe 600 is up more than 7 per cent.

The sell-off has been especially damaging for a market that was already struggling with its heavy exposure to troubled sectors such as luxury goods and carmakers.

“France used to trade at a premium to the rest of Europe but that has clearly shifted,” said Kevin Thozet, a member of the investment committee at French asset manager Carmignac. He pointed to a snap parliamentary election in 2024 as the beginning of a “broad-based” French underperformance that has sharpened since the summer.

Investors say the country’s lagging markets are unlikely to make up ground quickly.

“It is going to be very hard to get anyone bidding French stocks in the coming weeks,” said Emmanuel Cau, head of European equities strategy at Barclays, pointing to ongoing negotiations over France’s budget and next April’s election as making it “hard to get visibility or stability”.

The recent sell-off, led by bank stocks, is piling extra pressure on a market that was already under strain.

In the first half of this year, French banks had been riding a broad rally for the sector in Europe. But that momentum ended with the bond market sell-off, which has spilled into broader Eurozone markets in recent weeks.

French banks are big holders of government debt, and investors worry that the bond market rout could hit economic growth and sour their loan books. Shares in Société Générale have dropped more than 20 per cent since the start of August, and BNP Paribas has tumbled 19 per cent, as the euro hit its lowest against the pound and the dollar since mid-2025.

“Buying French banks is for the brave,” said Thozet at Carmignac. “I don’t think there will be many heroes out there.”

The luxury sector, one of the heaviest weightings in the French market, has slumped this year as a multiyear downturn in demand for high-end goods has weighed on earnings. Luxury goods giants LVMH, Hermès and Kering are all down more than 25 per cent so far this year.

At the same time, big French carmakers such as Stellantis and Renault are being squeezed by Donald Trump’s trade tariffs on the one hand and fierce Chinese competition on the other. Stellantis is down almost 60 per cent in 2026 and Renault has lost 25 per cent.

With its heavy weighting towards industrials, banks and luxury, France’s large-cap market has relatively little exposure to energy and technology stocks, the top-performing sectors globally this year. Gains have been heavily concentrated in these little-represented sectors: chipmaker STMicroelectronics is up 94 per cent this year and TotalEnergies has gained 44 per cent.

Weakness in French stocks contrasts with resilience in other European markets. Equities in the UK, Germany, Italy and Spain have all rallied this year, with the latter two up more than 11 per cent.

The deep sell-off in French government debt has pushed 10-year borrowing costs to nearly 5 per cent, their highest in almost a quarter of a century, feeding worries over the sustainability of France’s debt pile, which is equal to almost 120 per cent of GDP.

Some big investors have warned that the fiscal outlook could worsen further as politicians tussle over a €54bn savings drive in the government’s draft budget while trying to pander to voters ahead of April’s presidential election.

“There are concerns about the potential impact on the economy as yields rise,” said Vincent Chaigneau, head of research at Generali Asset Management, on the weakness in French stocks and credit. “Confidence is low and is going to remain low into the election.”

Some argue that beaten-down equities will find buyers. Marina Zavolock, head of European equities strategy at Morgan Stanley, said the sell-off in French stocks looked like a “sentiment-driven trade” following the bond market weakness.

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“Time will tell if it comes through in earnings fundamentals, but we see limited signs of that for now,” Zavolock said. “Typically, this is a good point to buy the dip.”

But others warn that stocks could take a fresh leg lower if the economic troubles deepen. In a note this month, analysts at Goldman Sachs said that a “specific French risk premium” explained around half of France’s underperformance against other European equity markets in recent years.

“Almost every French sector now trades at a discount to its European counterpart and at an even larger discount to US peers,” they said, warning that domestically exposed equities could face a further hit if “political uncertainty persists, domestic growth weakens or pressure on the euro intensifies”.