) surrendered its banking license in India. However, UBS will
continue with its investment banking and equities business
through its subsidiary - UBS Securities India Private Ltd. - for
the time being. The Swiss banking giant will probably apply for a
separate banking license to continue with its wealth management
operations under a representative office.
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Nevertheless, the company plans to shut down its wealth
management and foreign exchange business over a span of 2 years.
This could result in 50 job losses overall.
In 2010, UBS began its Indian operations, which provided services
primarily to large organizations and wealthy individuals, through
lending, foreign exchange, and foreign commercial borrowing
services. These catered principally to the bank's
UBS's decision to quit its Indian operations comes subsequent to
stringent regulations as well as a slowdown in the local economy.
The Reserve Bank of India - the country's central bank as well as
regulatory watchdog - has demanded that foreign banks operate as
wholly owned subsidiaries. The RBI in its recent annual monetary
policy statement has proposed a new banking structure involving
different licensing rules for domestic and foreign banks instead
of granting the universal banking license.
Though the banking license would have given the Swiss bank a
strong foothold in the Indian foreign exchange business, it meant
additional capital obligation. However, UBS will be the second
foreign bank to pursue wealth management business in India if it
opts for a differentiated license. Earlier, in 2008,
American Express Co.
) was granted permission to operate credit card and
travel-related businesses in India.
UBS was one of the major banks to have been adversely hit by the
eurozone crisis. Given its declining revenues, the company was
forced to reduce its costs by exiting its non-profitable arms and
concentrating more on its core businesses.
Strict regulations and stiff local competition has kept away many
Wall Street biggies from the commercial banking business in
India. In the recent past,
The Goldman Sachs Group, Inc.
) have also discontinued their Indian operations.
UBS currently carries a Zacks Rank #3 (Hold).