UBS to focus on India business

UBS to focus on India business
The Economic Times, January 18, 2010, Page 15

George Smith, ET Bureau

UBS started its banking operations in India last year at the height of the global crisis. ET’s George Smith Alexander met Alexander Wilmot-Sitwell, CEO of UBS Investment Bank and chairman & CEO, UBS Group EMEA. Mr Wilmot-Sitwell says, that after China, India is the new focus area for the group and the bank will be increasing its present headcount of 150 here by another 40-50% in the next 12 to 18 months. Excerpts:

What are the plans for UBS on the business front and hiring in India?

For us, India is a strategic priority for continued investment and growth. We have a full banking licence and need to build our business around that. We will focus on high networth private markets with our wealth management platform and corporate institutional franchise in the securities and investment banking platform. We will grow our headcount by 40-50% in the next 12-18 months. The new hires will be in fixed income and equities and in other areas like foreign exchange and debt capital market. We are also building our operations, technology, back office and will be hiring in these divisions too.

How do you see Swiss banks looking at changing regulations, specially on higher disclosure?

I don’t think Swiss banks will be regulated fundamentally differently from other international banks. The Swiss regulator is likely to adopt the same types of requirements and regulations that will be adopted around the world. I hope that the regulatory landscape will be a much more consistent one. The difficulty and challenge that we have at the moment is the very uneven playing field between the different interpretations and engagements with regulation in different jurisdictions. I think it will be a lot better for the banking industry as a whole for a much more consistent approach taken by different regulators around the world so that the levels of disclosure, capital and transparency of regulation and of operation are consistent right across the world.

The Swiss banking regulator had said last year that large banks like UBS and Credit Suisse should be broken up. Your comments.

I don’t think that’s a sensible approach because I think the global economy needs to be serviced by banks that are able to operate on a global basis and with sufficient scale to have an impact. I think to fragment the banking industry will be a reversal of the globalisation trend and will result in banks of insufficient scale, knowledge and international capability to be able to service the needs of global industry. If banks were forced to break up, become smaller and less international, I don’t think that will be in the best interest of the global economy.

How is UBS taking advantage of the Chinese growth?

In China, we participated and put together a joint venture company with the Beijing Municipal Authority and that company trades under the name of UBS Securities. It gives us a licence to trade securities in the domestic market. We also have asset management, wealth management and an investment banking presence. Over the past three years, we have been the most successful international firm in China. To some extent, we probably focused more resources earlier over a long period of time on China within the Asia region and increasingly we are now turning our focus of growth to India, as it is the next area where we see growth opportunities for us.

How do you see regulations changing globally for banks and their impact?

We are beginning to see the impact of some of the new rules being drafted and applied. There is no doubt that banks will have to carry more capital and are going to be more regulated and more closely scrutinised than they have been in the past several years. The impact of regulatory supervision is probably going to be greater than many people have factored in. Whether it’s leverage ratios, capital ratios or liquidity — these are all measures that we are going to see fundamental changes in the way that banks are supervised. There are a lot of people who will suggest that banks are going to be significantly less profitable in the future, as they will have leverage ratios applied to them and as such they will not be able to drive the same returns on capital as we have seen in the past.

How much does Asia contribute to UBS revenues now? Will this proportion increase over the next 4-5 years?

Asia brings in 20% of our revenues. We have very explicity targeted Asia as a region where we are stronger and have above-average growth over the medium term. Therefore, we will continue to invest in the Asia region and grow at a fast rate than the other regions.