UBS announces London overhaul as profit rises

(PA)

Switzerland’s largest bank, UBS, has 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 5,600 people in the capital, down from 6,500 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 Sfr1.5bn (£1bn). Unlike Barclays, its investment bank operating profits rose 18 per cent to Sfr2.2bn.

Its rival Credit Suisse is meanwhile 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 $1.6bn (£948m) to settle the case, higher than the $1.2bn it has set aside. The Swiss finance minister Eveline Widmer-Schlumpf was in Washington on Friday, meeting with the US attorney general Eric Holder.

Yesterday, Switzerland also officially signed up to a global standard to automatically exchange tax information with other countries at a ministerial meeting in Paris.