UBS AG (UBSN), Switzerland’s largest bank, had the outlook on its credit rating revised to “stable” from “negative” by Standard & Poor’s, which cited the firm’s efforts to reduce risks in its investment bank.
“The stable outlook reflects our view that UBS will continue to refocus the investment-banking division’s operating model and reduce risk exposures, amid continued strained economic and market conditions,” S&P said in a statement today.
The rating company affirmed Zurich-based UBS’s A long-term and A-1 short-term counterparty credit ratings, S&P said. The bank rose 1 percent to 10.55 Swiss francs in Zurich trading, trimming the decline this year to 5.6 percent.
UBS posted a 58 percent drop in second-quarter profit last month, hurt by a loss at the investment bank. Chief Executive Officer Sergio Ermotti is shrinking the unit’s risk-weighted assets by more than half to focus on wealth management as rising capital requirements and Europe’s sovereign-debt crisis drag on profitability. The 52-year-old Ermotti took over last year after his predecessor Oswald Gruebel stepped down following a $2.3 billion loss the bank blamed on unauthorized trading.
UBS already cut total annualized expenses by 1.1 billion francs ($1.13 billion) in the first half from a year ago and reached its 2013 headcount reduction target at the securities unit, Ermotti told reporters on July 31. The bank will further adjust costs for the group and its investment bank, he said.
The bank said in a statement S&P’s decision “reflects the significant progress that we have made in adapting to changes in the regulatory and market environment.” The rating company “also acknowledges that UBS is well positioned to withstand the ongoing economic and political uncertainty in the euro zone,” UBS added.
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