The logo of Swiss bank UBS, in Zurich, Switzerland, on March 20, 2023.Denis Balibouse/Reuters
Switzerland’s UBS UBS-N raised its forecast for first-quarter combined net interest income (NII) in its wealth management and personal and corporate banking businesses on Tuesday, although its shares fell along with other European banks by more than 3 per cent.
The UBS stock price has dropped more than 8 per cent since the government last week said it would tighten banking regulation, against a 3.2 per cent drop in the European banking sector.
Adding to the heat were remarks by Swiss Finance Minister Karin Keller-Sutter, who indicated UBS could have to find $15-billion to $25-billion in extra capital under the plans.
UBS revised its first-quarter NII forecasts to single digits, an improvement from February when the Zurich-based bank said it expected NII for personal and corporate banking and global wealth management to be roughly flat.
The new guidance reflected how the first quarter had gone, a person familiar with the bank’s thinking told Reuters.
UBS declined to comment on the revised projection, which it made as it published restated historical financial data at a business segment level, which it said would improve consistency.
The changes include transferring Credit Suisse Swiss Bank’s high net worth clients from personal and corporate banking to wealth management, and moving all group treasury costs to the business divisions, which were historically retained centrally.
Goldman Sachs analysts said the transfer of Credit Suisse’s high net worth clients was “supportive of UBS’ ambition” to build more synergies, while the re-allocation of group costs to business divisions would be positive as it forced individual units to manage overall group costs more actively.
The analysts hold a “buy” rating on UBS shares.
Keller-Sutter told the Tages-Anzeiger newspaper on Tuesday that estimates UBS would need to find another $15-billion to $25-billion under the Swiss government’s plan to make the banking sector more robust were about right.
Switzerland’s proposals are tailored for banks deemed “too big to fail,” particularly UBS, to prevent a repeat of Credit Suisse’s collapse last year.
The government said UBS would face more stringent capital requirements in future.