Wealth Management

UBS clear to move $36.5 billion of assets to Germany over Brexit

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UBS is the latest bank to go to court for permission to activate Brexit plans, with the country’s scheduled departure now just weeks away.

Wednesday 06, February 2019


(Bloomberg) --The impact of Brexit on London’s financial sector came into stark relief as a judge approved plans by a UBS Group AG unit to shift some of its UK business -- involving assets valued at more than EUR 32 billion ($36.5 billion) -- to Germany.

The Swiss bank’s plans are a response to the external shock of Britain’s exit from the European Union, not designed for “commercial advantage” or based on any “internal rationalisation,” said Judge Alastair Norris in London, who approved the proposal Tuesday.

The goal is to keep operations going amid uncertainty about the post-Brexit future of pass porting rights, which allow financial companies to market products and services in any EU country without having to set up a branch there. Earlier Tuesday, when the bank’s lawyers applied for permission to make the changes, they cited a “real and immediate risk” that UBS may lose the right to conduct some operations in the EU.

The bank’s equity trading venue is staying in London, even as rivals accelerate plans to shift trading elsewhere in Europe.

Last week Barclays got the green light to transfer large parts of its business from Britain to its Dublin-based subsidiary if needed.

UBS plans to transfer the operations of its British unit, UBS, to its German unit, UBS Europe, on 1 March, making the German business big enough to be regulated by the European Central Bank. The business being transferred involves assets of more than EUR 32 billion, according to UBS’s court filings.

It includes deposit taking and some operations in equities, foreign currency and credit, as well as some of the bank’s corporate client solutions function, which covers structured finance, lending, equity capital markets, debt capital markets, leveraged capital markets and mergers-and-acquisitions work. Fewer than 200 jobs are expected to be transferred.

Before the UK unit is dissolved, some of its operations in-cash equities, rates and credit, and exchange-traded derivatives -- mostly business with “exempt clients” that doesn’t need to move abroad because of Brexit -- will be transferred to UBS’s London branch. Those operations cover about 15 per cent of the British unit’s assets and 43 per cent of profits.

UBS has “diligently assessed the impact” of its plans and sought to lessen it, Norris said in his judgement. Its plans strike “an appropriate balance” between providing certainty to clients and coping with the “exigencies of transferring to a different jurisdiction,” he said.

UBS set out plans last March to move operations to Europe. The court hearing was the last step in implementing them.

TAGS : UBS, Barclays, Brexit, European Central Bank, Theresa May

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