UBS to surrender its banking licence in India

According to sources, the Swiss bank will submit a roadmap on winding down its banking business in India

Swiss bank UBS AG has decided to exit from its banking business in India and is planning to surrender its licence to the Reserve Bank of India (RBI) next week.

“UBS has decided to exit its fixed income business in India. The bank will continue its equity and investment banking operations and make investments in these businesses as and when needed. The move is part of UBS’ global strategy to focus on core strengths in different markets and operate capital-light businesses,” a source familiar with the development said.

According to sources, the Swiss bank will present a road map on winding down its banking business in India. “The process is expected to be completed in two years,” the person said.

A spokesperson of UBS declined to comment on the development. UBS has one branch in Mumbai. According to RBI data, it had 57 employees in India at the end of March 2012.

The move to surrender the banking licence surprised many, as UBS had named Nitin Jain its new India head for fixed income, currencies and commodities business only nine months back, in September 2012.

“The appointment underlines the continuing importance of India as key fixed-income, currencies and commodities market for UBS in the region,” the Swiss lender had said in a statement then.

The bank’s profitability in India has been under stress in the past few years. Its profit per employee in the country almost halved to Rs 54.8 lakh in 2011-12, from Rs 1.09 crore the previous year. Return on assets also narrowed to 0.48 per cent from 1.63 per cent during this period.

In 2011-12, UBS’ India net profit fell 47 per cent to Rs 31 crore. It incurred losses in treasury bank and wealth management businesses.