The trend is born out by data: while UBS dominates equity capital market league tables in Switzerland, according to Dealogic (see graph below), it has dropped out of the top-ten in lending and M&A.
UBS' restrictions on lending aren't apt to change anytime soon. The new co-heads Novelli and Karofsky will have to find a way to fend off the competition, keep their team together, and ensure they are heard within wider UBS as well.
Bargaining Chip?
To be sure, UBS isn't expected to pare back its investment bank even further. In its business with super-rich clients – one of UBS' key growth markets – access to investment banking services is still viewed as indispensable. This is especially true in Asia, where rich entrepreneurs are also seeking advice on capital market transactions for their firms, for example.
Not least, UBS' investment bank may end up being a valuable bargaining chip for a mega-deal – should UBS ever reverse its stance on them.
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