Artisan Partners' Global Value Team and International Value Group sent a letter to the board of UBS Group AG urging the bank to relocate outside Switzerland over proposed capital requirements. The two teams, which initiated their UBS positions in 2015, said accounts they manage collectively own more than 60 million UBS shares. The letter states that current rules require UBS to hold USD 56 billion of core equity tier one capital, while the proposal likely to become law would raise that to USD 72 billion, leaving USD 16 billion of shareholder capital earning zero return. Artisan argues that in a jurisdiction with rules closer to current Swiss rules, that USD 16 billion could generate a 15% return, or USD 2.4 billion of additional net income, and at a 15X multiple that equals USD 36 billion of foregone market capitalization, roughly 23% of UBS' current value. The letter, signed by portfolio managers Daniel O'Keefe, Michael McKinnon and Ian McGonigle, calls the cost excessive, punitive and unnecessary and urges the board to part ways with Switzerland.
UBS Group AGProposed Swiss capital rules would raise UBS's required core equity tier one capital from USD 56 billion to USD 72 billion, leaving USD 16 billion earning zero return and potentially USD 36 billion of foregone market cap.
Artisan Partners Asset Management IncArtisan Partners' value teams sent the letter urging UBS to relocate, but the news is about UBS's capital rules, not Artisan's own financials.
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