UBS is reviewing the structure of its UK banking division ahead of the publication of new supervisory rules by the Prudential Regulation Authority.
In February, the PRA published a consultation on its approach to supervising international banks. The document focused on banks operating in the UK but headquartered outside the European Economic Area.
The supervisory approach proposed by the PRA, which will apply to new and existing branches, centres on an assessment of whether the home state’s supervision of the whole firm and the branch’s UK activities meet UK standards. The approach will also factor in the level of assurance the PRA gains from the home state supervisor over resolution if the firm is failing.
In UBS’ annual report, published this week, the firm says the PRA expects new non-EEA branches to focus on wholesale banking and to do so at a level that is not critical to the UK economy.
It says the proposals potentially impact the scope of business that could be undertaken by UBS’ UK subsidiary, UBS Limited.
UBS says: “During Q2, we expect to commence the implementation of a revised business and operating model, including changes to the company’s risk profile, to the effect that UBS Limited will bear and retain a greater degree of the risk and reward of its business activities.”