Latest news with #ArianeLuthi
Zawya
30-07-2025
- Business
- Zawya
UBS beats expectations with $2.4bln second-quarter profit
ZURICH - UBS said on Wednesday that second-quarter profit more than doubled from a year earlier as market turmoil drove trading activity. Net profit attributable to shareholders for Switzerland's largest bank came in at $2.4 billion, comfortably ahead of a company-provided consensus estimate of $2.045 billion. In its investment banking division, revenues for global markets surged 25% during a quarter when trading cues were focused on ructions caused by U.S. President Donald Trump's tariff war. At the same time, transaction-based income for its global wealth management division rose 12%. Integration of its one-time rival Credit Suisse remained on track, UBS said in a statement, with one-third of client accounts booked in Switzerland migrated. Cumulative cost reductions reached $9.1 billion, or 70% of expected gross cost savings, it added. UBS was delivering on its capital return plans for 2025 and continued accruing for double-digit growth in its dividend, the bank said. It is reporting earnings for the first time since the Swiss government proposed in June stricter rules for the country's remaining big bank. UBS has said it strongly disagrees with what it calls an "extreme increase" in proposed capital requirements to cover risks in its foreign operations and which could mean it would need to hold around $24 billion in additional CET1 capital. (Reporting by Ariane Luthi; Editing by Edwina Gibbs)
Yahoo
29-07-2025
- Business
- Yahoo
Exclusive-UBS steps up contingency planning as it tries to tame Swiss rules, sources say
By Oliver Hirt, Ariane Luthi and Julie Zhu ZURICH/HONG KONG (Reuters) -UBS is briefing senior staff that the need to examine moving its HQ from Switzerland has grown since the government proposed new capital rules, a source with knowledge of the matter said, while another pointed to London as a favourite alternative. The Swiss government proposed reform measures in June that envisage that UBS - as Switzerland's sole remaining global bank with a balance sheet about double the size of the economy - should capitalise its foreign subsidiaries by 100% rather than 60% currently, to cover potential losses abroad. That could mean the bank has to carry an extra $24 billion in capital. A review by UBS looking at contingency planning has concluded that London is one of the best options for an alternative location should the bank try and move, one of the sources said. Britain has similar rules on foreign subsidiaries but a third source said authorities outside Switzerland may show more flexibility. Two sources familiar with the bank's thinking said UBS was also warning internally that it could be vulnerable to a future takeover by a foreign rival if it were weakened by the rules. The sources spoke on condition of anonymity because the discussions are confidential. UBS, which is due to release second quarter earnings on Wednesday, has intensified lobbying with parliament since June 6 to push back against the proposed capital changes, two lawmakers said. Even insiders at the Zurich-based wealth manager say UBS - whose leadership argues it came to the rescue when it bought Credit Suisse in a government-engineered deal - does not intend to leave Switzerland. All agree that UBS's principal objective is to soften the regulations. Even so, UBS executives think the government's demands mean that if no compromise is reached, it may need to respond radically, one source familiar with the lender's thinking said, pointing to a possible relocation. UBS told Reuters it would engage in the consultation process for the new rules while evaluating appropriate measures "to address the negative effects that extreme regulations would have on its shareholders." Its Swissness was a "differentiating element", it said, adding that UBS - which has been running an advertising campaign themed "A bank like Switzerland" - wanted to be based in Switzerland "leveraging the mutually beneficial relationship." Switzerland's finance ministry declined to comment on what it said were internal UBS decisions. FINMA, the Swiss regulator, declined to comment. UBS earlier this year started warning about the possibility of shifting its headquarters, but the latest deliberations are reported here for the first time and highlight a political tug-of-war between UBS, led by CEO Sergio Ermotti, and the government about what is best for the bank and for Switzerland. Representatives for the UK Treasury, Bank of England and the Financial Conduct Authority declined to comment. Swiss Finance Minister Karin Keller-Sutter said in June that the new rules would make it more costly for the bank to grow abroad but that she hoped UBS would stay in Switzerland. DIFFICULT MOVE As for any large bank, relocation would be costly and difficult and industry insiders say Switzerland's global renown as a wealth management centre has been central to UBS' business model. Pressure is, however, growing on the bank. UBS's shares have underperformed rivals, gaining 7% in 2025 against the wider sector's 37% as investors fear the new rules will impede shareholder payouts and growth prospects. One UBS shareholder, speaking on condition of anonymity, told Reuters it would be difficult for the bank to attract investors if the capital rules talks dragged on for three or four years without the bank making progress in softening them. The ball "is in UBS's court" to find a solution, the investor said. Under the proposed capital requirements, UBS's Common Equity Tier 1 capital ratio, a key measure of bank capital, of 14.3% could reach 17%. That would put it above rivals like JPMorgan at 15.8%, Morgan Stanley at 15.7%, and Goldman Sachs at 15.3%, the government estimated in June. Outside experts say like-for-like comparisons are difficult. PERSUADING INVESTORS Switzerland's parliament is not due to receive a draft law on the rules until well into 2026. But UBS executives want to reassure investors by early 2026 they can soften the final legislation, two of the sources said. If it cannot placate investors coming into 2026, UBS may try to repatriate more than the $5 billion in capital it already plans to return to its parent bank, which could eventually fund payouts, analysts say. UBS's efforts have already yielded fruit. Last month a parliamentary committee backed a motion to make the government send all the new banking rules to parliament instead of issuing some directly. "We have to find the right balance between capital that minimises risks but also maintains UBS's competitiveness," said Beat Walti, the lawmaker who proposed the amendment. (Additional reporting by Dave Graham, Lananh Nguyen and Stefania Spezzati; Editing by Tommy Reggiori Wilkes and Susan Fenton)
Yahoo
06-06-2025
- Business
- Yahoo
Analysis-Shaken by crises, Switzerland fetters UBS's global dream
By Ariane Luthi and John O'Donnell BERN (Reuters) -Switzerland announced reforms on Friday to make its biggest bank UBS safer and avoid another crisis, hampering the global ambitions of a lender whose financial weight eclipses the country's economy. UBS emerged as Switzerland's sole global bank more than two years ago after the government hastily arranged its rescue of scandal-hit Credit Suisse to prevent a disorderly collapse. The demise of Credit Suisse, one of the world's biggest banks, rattled global markets and blindsided officials and regulators, whose struggle to steer the lender as it lurched from one scandal to the next underscored their weakness. On Friday, speaking from the same podium where she had announced the Credit Suisse rescue in 2023 as finance minister, Switzerland's president Karin Keller-Sutter delivered a firm message. The country would not be wrongfooted again. "I don't believe that the competitiveness will be impaired, but it is true that growth abroad will become more expensive," Keller-Sutter said of UBS. "We've had two crises. 2008 and 2023," she said. "If you see something that is broken, you have to fix it." During the global financial crisis of 2008, UBS was hit by a losses in subprime debt, as a disastrous expansion into riskier investment banking forced it to write down tens of billions of dollars and ultimately turn to the state for help. Memories of that crisis also linger, reinforcing the government's resolve after the collapse of Credit Suisse. For UBS, which has a financial balance sheet of around $1.7 trillion, far bigger than the Swiss economy, the implications of the reforms proposed on Friday are clear. Switzerland no longer wants to back its international growth. "Bottom line: who is carrying the risk for growth abroad?" said Keller-Sutter. "The bank, its owners or the state?" The rules the government proposed demand that UBS in Switzerland holds more capital to cover risks in its foreign operations. That move, one of the most important steps taken by the Swiss in a series of otherwise piecemeal measures, will make UBS's businesses abroad more expensive to run for one of the globe's largest banks for millionaires and billionaires. Following publication of the reform plans, UBS Chairman Colm Kelleher and CEO Sergio Ermotti said in an internal memo that if fully implemented, they would undermine the bank's "global competitive footprint" and hurt the Swiss economy. STRATEGY The reform would require UBS to hold as much as $26 billion in extra capital. Some believe the demands may alter the bank's course. "It could be that UBS has to change its strategy of growth in the United States and Asia," said Andreas Venditti, an analyst at Vontobel. "It's not just growing. It makes the existing business more expensive. It is an incentive to get smaller and this will most likely happen." Credit Suisse's demise exploded the myth of invincibility of one of the wealthiest countries in the world, home to a global reserve currency, and proved as unworkable a central reform of the financial crisis to prevent state bailouts. For many in Switzerland, the government's reforms are long overdue. "The bank is bigger than the entire Swiss economy. It makes sense that it should not grow even bigger," said Andreas Missbach of Alliance Sud, a group that campaigns for transparency. "It is good that the government did not give in to lobbying by UBS. The question is whether it is enough. We have a banking crisis roughly every 12 years. So I'm not really put at ease." UBS CEO Ermotti had lobbied against the reforms, arguing that a heavy capital burden would put the bank on the back foot with rivals. The world's second-largest wealth manager after Morgan Stanley is dwarfed by its U.S. peer. Morgan Stanley shares value the firm at twice its book value, compared with UBS's 20% premium to book. On Friday, the bank reiterated this message, saying that it strongly disagreed with the "extreme" increase in capital. But others are sceptical that the government has done enough. Hans Gersbach, a professor at ETH Zurich, said there was still no proper plan to cope should UBS run into trouble. "The credibility of the too big to fail regime remains in question." (Additional reporting by Dave Graham and Oliver Hirt in Zurich; Writing By John O'Donnell; editing by David Evans)
Yahoo
06-06-2025
- Business
- Yahoo
Analysis-Shaken by crises, Switzerland fetters UBS's global dream
By Ariane Luthi and John O'Donnell BERN (Reuters) -Switzerland announced reforms on Friday to make its biggest bank UBS safer and avoid another crisis, hampering the global ambitions of a lender whose financial weight eclipses the country's economy. UBS emerged as Switzerland's sole global bank more than two years ago after the government hastily arranged its rescue of scandal-hit Credit Suisse to prevent a disorderly collapse. The demise of Credit Suisse, one of the world's biggest banks, rattled global markets and blindsided officials and regulators, whose struggle to steer the lender as it lurched from one scandal to the next underscored their weakness. On Friday, speaking from the same podium where she had announced the Credit Suisse rescue in 2023 as finance minister, Switzerland's president Karin Keller-Sutter delivered a firm message. The country would not be wrongfooted again. "I don't believe that the competitiveness will be impaired, but it is true that growth abroad will become more expensive," Keller-Sutter said of UBS. "We've had two crises. 2008 and 2023," she said. "If you see something that is broken, you have to fix it." During the global financial crisis of 2008, UBS was hit by a losses in subprime debt, as a disastrous expansion into riskier investment banking forced it to write down tens of billions of dollars and ultimately turn to the state for help. Memories of that crisis also linger, reinforcing the government's resolve after the collapse of Credit Suisse. For UBS, which has a financial balance sheet of around $1.7 trillion, far bigger than the Swiss economy, the implications of the reforms proposed on Friday are clear. Switzerland no longer wants to back its international growth. "Bottom line: who is carrying the risk for growth abroad?" said Keller-Sutter. "The bank, its owners or the state?" The rules the government proposed demand that UBS in Switzerland holds more capital to cover risks in its foreign operations. That move, one of the most important steps taken by the Swiss in a series of otherwise piecemeal measures, will make UBS's businesses abroad more expensive to run for one of the globe's largest banks for millionaires and billionaires. Following publication of the reform plans, UBS Chairman Colm Kelleher and CEO Sergio Ermotti said in an internal memo that if fully implemented, they would undermine the bank's "global competitive footprint" and hurt the Swiss economy. STRATEGY The reform would require UBS to hold as much as $26 billion in extra capital. Some believe the demands may alter the bank's course. "It could be that UBS has to change its strategy of growth in the United States and Asia," said Andreas Venditti, an analyst at Vontobel. "It's not just growing. It makes the existing business more expensive. It is an incentive to get smaller and this will most likely happen." Credit Suisse's demise exploded the myth of invincibility of one of the wealthiest countries in the world, home to a global reserve currency, and proved as unworkable a central reform of the financial crisis to prevent state bailouts. For many in Switzerland, the government's reforms are long overdue. "The bank is bigger than the entire Swiss economy. It makes sense that it should not grow even bigger," said Andreas Missbach of Alliance Sud, a group that campaigns for transparency. "It is good that the government did not give in to lobbying by UBS. The question is whether it is enough. We have a banking crisis roughly every 12 years. So I'm not really put at ease." UBS CEO Ermotti had lobbied against the reforms, arguing that a heavy capital burden would put the bank on the back foot with rivals. The world's second-largest wealth manager after Morgan Stanley is dwarfed by its U.S. peer. Morgan Stanley shares value the firm at twice its book value, compared with UBS's 20% premium to book. On Friday, the bank reiterated this message, saying that it strongly disagreed with the "extreme" increase in capital. But others are sceptical that the government has done enough. Hans Gersbach, a professor at ETH Zurich, said there was still no proper plan to cope should UBS run into trouble. "The credibility of the too big to fail regime remains in question." (Additional reporting by Dave Graham and Oliver Hirt in Zurich; Writing By John O'Donnell; editing by David Evans) Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Yahoo
06-06-2025
- Business
- Yahoo
Switzerland hits UBS with $26 billion added capital requirement; shares rise
By Ariane Luthi and Oliver Hirt BERN (Reuters) -The Swiss government on Friday proposed stricter rules for UBS following its takeover of Credit Suisse, which could make it hold $26 billion more in core capital, confirming some of the bank's worst fears about incoming new regulations. The key proposal, which the bank would have six to eight years to prepare for after it became law, is that UBS must fully capitalise its foreign units, confirming what many analysts, lawmakers and executives had been expecting. UBS shares, which have lagged European peers amid uncertainty about the new rules, jumped after the proposals were made public on Friday afternoon, rising by more than 6% and on track for their best day since May 2024. The government said its capital requirement proposal would allow UBS to reduce its holding of Additional Tier 1 (AT1) bonds by $8 billion. Today, UBS must only 60% capitalise its foreign units and can cover some of the capital with AT1 debt. UBS executives say the additional capital burden will put the Zurich-based bank at a disadvantage to rivals and undermine the competitiveness of Switzerland as a financial centre. Such was the shock in Switzerland over the 2023 collapse of Credit Suisse that top politicians led by Finance Minister Karin Keller-Sutter vowed to introduce more robust rules that would protect taxpayers and prevent another meltdown in future. Keller-Sutter now holds Switzerland's rotating one-year presidency and Friday's announcement will start a long period of political wrangling over the measures, which the governing federal council called "targeted and proportionate." "They strengthen trust in the financial centre, which, in the view of the federal council, is central to its stability and competitiveness," the council said in a statement. A parliamentary inquiry last year noted that since UBS bought Credit Suisse for 3 billion Swiss francs ($3.65 billion) in March 2023, it has had a balance sheet bigger than the Swiss economy, and urged the government to take the foreign units into account. The federal council said it would present drafts on the proposals for consultations with stakeholders in the second half of 2025. Finance Ministry officials say laws requiring parliamentary approval will not enter force before 2028. Separate measures known as ordinances that can be issued directly by the government could apply from the start of 2027. A six to eight-year transition period looked appropriate for UBS to meet new rules on capitalising foreign units from when they come into force, the government said. That could give the bank until the mid-2030s to comply. POSSIBLE TARGET? Sources inside the bank have warned the new regulations could make UBS an appealing takeover target. Under the Swiss proposals, UBS's Common Equity Tier 1 (CET1) capital ratio could end up somewhat higher than those of global rivals, the government said. UBS's CET1 ratio of 14.3% could rise up to 17%, above rivals like JPMorgan at 15.8%, Morgan Stanley at 15.7%, and 15.3% at Goldman Sachs, it said. Shares in UBS rose more than 60% in the 12 months following its acquisition of Credit Suisse. But the stock has since sharply underperformed; UBS shares have lost about 5% in the past year, while a top European banking index climbed 37%. Analysts say the new regulations could trigger a rejig of UBS's business model, which now focuses on growth in the United States and Asia. To take the edge off the rules, the bank may be tempted to sell some assets, banking experts say. The Swiss government also set out piecemeal reforms to bolster the market regulator FINMA, which was heavily criticised for its response to the Credit Suisse collapse. These include measures aimed at holding bankers to account, giving the regulator the power to impose fines and making it easier to restrain pay and claw back bonuses. Still, the proposals come years after the European Union introduced similar measures in the wake of the 2007-2009 financial crisis. The government also proposed making it easier for banks to access liquidity from the Swiss National Bank. Barriers to transferring collateral to the SNB will also be removed. ($1 = 0.8222 Swiss francs) Sign in to access your portfolio
