UBS CEO Sergio Ermotti has said that the bank is not looking at disposing of its investment banking business to meet regulatory demands to hold more capital, Bloomberg reported.
Last week, Mediobanca SpA analysts reported that UBS may spin off the investment-banking business as higher capital requirements from regulators curb efforts to increase returns.
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Additionally, the Swiss bank is also restructuring its business to increase profits by slashing 10,000 jobs and its debt-trading businesses while focusing on money management.
In October 2013, UBS said that the bank’s plan to boost its return on equity to 15% will be postponed by at least a year from an earlier target of 2015 after the Swiss regulator was asked to hold more capital for litigation risks. Ermotti said that UBS will boost its common equity ratio to 13% by the end of this year.
According to Mediobanca, the investment banking unit run by chief Andrea Orcel might earn a return on tangible equity of 14.4% by 2017.
Ermotti said: "We are not considering that option. We have very defined assets and capital that we want to put at work in the investment bank, and the business model works.
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By GlobalData"The businesses that may be affected the most by a higher leverage ratio is our mortgage portfolio, is our corporate loan portfolio in Switzerland. To imply necessarily that a higher leverage ratio means that the investment bank is the one most affected is too much of a simple conclusion.
"Investment banking is very strategic for us. We have been making a lot of changes to our strategy. The strategy is working, and is one that is focused on supporting our clients in wealth management, corporate and institutional," he added.
