Switzerland’s largest bank UBS today announced plans to create separate legal entities which would see more of the risk attached to its investment bank moved to London.
UBS, which employs 5600 people in the capital, down from 6500 two years ago, said it would inject more capital into UBS Limited (the UK business) to reflect the fact that it will be “bearing and retaining a greater degree of risk and reward of its business activities”.
The Swiss business will concentrate on retail banking and domestic wealth management activities. UBS said this would improve its ability to shut one area of the bank without damaging another. Under “too big to fail” rules it would also release capital which the bank will pay back to shareholders through a special dividend.
UBS said headline pre-tax profits doubled in the first quarter to Swfr1.5 billion (£1 billion). Unlike Barclays, its investment bank operating profits rose 18% to Swfr2.2 billion.
Rival Credit Suisse is reported to be in talks to settle allegations by the Department of Justice that it helped US citizens avoid tax. It could pay as much as $1.6 billion (£948 million) to settle the case, which is higher than the $1.2 billion it has set aside.
