Global Biz

UBS plans to move investment bank from Switzerland

(Agencies)
Updated: 2011-05-26 14:35

Swiss bank UBS Chairman Kaspar Villiger delivers his speech during the general shareholders meeting in Basel, April 28, 2011.[Photo/Agencies]

ZURICH - Swiss bank UBS is planning to separate its investment bank and incorporate it outside of Switzerland to placate regulators, the Wall Street Journal reported on Thursday.

UBS is considering incorporating its investment bank, which lost billions during the financial crisis and was rescued by the Swiss central bank, in London, New York or Singapore, where it would have its own capital and be overseen by local regulators, the WSJ reported.

A UBS spokesman declined to comment on the report which he described as speculation. Switzerland's financial market regulator FINMA, which the WSJ said was pushing UBS to make the change, was not immediately available for comment.

Last month, UBS called for a year's delay to stringent Swiss capital rules to allow more clarity on international regulation, while striking a more conciliatory note by vowing to keep its base in Switzerland.

Chairman Kaspar Villiger told the bank's annual shareholders' meeting that UBS was not threatening to relocate abroad and was aware of the advantages of being based in Switzerland, but wanted to highlight the risks of tightening rules.

UBS Chief Executive Oswald Gruebel has said the stiff Swiss standards could force UBS to move units abroad.  

Last week, he moved to reassure staff at the investment bank, saying UBS planned to invest in rebuilding teams and in "existing talent", acknowledging recent scrutiny of personnel turnover at the bank. He added that UBS's ambitions went beyond being among the top five investment banks in the region.

Chairman Kaspar Villiger told the bank's annual shareholders' meeting last month that UBS was not threatening to relocate abroad and was aware of the advantages of being based in Switzerland.

But he also said UBS was investigating whether regulatory changes and new market trends would require strategic and organisational adjustments.

Villiger noted that independent advisory firm Autonomous Research calculated that 30 billion Swiss francs ($34.25 billion) could be distributed to shareholders if UBS sold its Swiss retail and corporates business, used the proceeds to boost its investment bank and shifted its head office to New York.

In April, the Swiss government handed to parliament plans to make UBS and Credit Suisse reach new capital standards that go beyond global rules, saying the benefit to the economy outweighed costs to the banks.

The popular right-wing Swiss People's Party (SVP) has proposed that UBS and Credit Suisse split off their US divisions, separating investment banking from wealth management.

UBS has defended the integrated bank model, saying investment banking provided important services for Swiss firms and was also indispensible for a global wealth manager.