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UBS Asset Management has lifted its ban on investments in certain defense companies, joining a trend among European asset managers to reconsider exclusions amid rising geopolitical tensions. The firm, which manages $1.8 trillion in assets, will now allow investments in conventional arms manufacturers, while still prohibiting controversial weapons. Other firms, including Allianz Global Investors and Danske Bank, are also easing restrictions on defense investments.
UBS Asset Management has removed its exclusion on investments in conventional weapons manufacturers, joining other European money managers like Allianz Global Investors in reassessing their policies amid rising geopolitical tensions. This shift comes as defense stocks surge due to increased military spending commitments from European nations. Exclusions remain for controversial weapons such as cluster munitions and biological weapons.
UBS is negotiating with regulators to limit its investment bank's size and increase capital reserves to avoid stricter regulations following the Credit Suisse collapse. The bank may cap its investment banking division at 30% of total business and is considering adding $5 billion in capital, though it faces demands for much more. UBS executives warn that excessive capital requirements could harm its competitiveness and potentially lead to a relocation of its headquarters, despite reassurances from lawmakers that extreme regulations will not be imposed.
UBS is proposing to limit the size of its investment bank and increase capital reserves to mitigate regulatory pressures following its acquisition of Credit Suisse. The bank may add $5 billion in capital, but this falls short of the $40 billion regulators might require. UBS is also considering capping its investment banking division at 30% of its total business to address concerns over financial stability while maintaining its headquarters in Switzerland.
UBS is negotiating with regulators to limit its investment bank's size and increase capital requirements following the Credit Suisse acquisition. The bank aims to avoid raising over $40 billion in additional capital, proposing to cap its investment banking division at 30% of total business. While UBS is prepared to strengthen its capital, it seeks to prevent excessive demands that could threaten its competitiveness and lead to a potential relocation of its headquarters.
Global hedge funds have continued to short European stocks for the second consecutive week, particularly targeting financial, materials, energy, and industrial sectors, according to Goldman Sachs data. Notably, Germany, Italy, the Netherlands, Denmark, and the UK saw the most net selling, with a focus on individual stocks rather than broader indices. Key short positions include asset manager Schroders and home improvement company Kingfisher, with significant bets against energy firm Petrofac as well.
UniCredit CEO Andrea Orcel indicated that a decision on a potential takeover of Commerzbank may not come until 2027, as the bank's shares have risen due to Germany's fiscal policies. He emphasized the need to assess the deal's value and navigate regulatory approvals, expressing concerns about the slow pace of European banking mergers. Orcel also noted that UniCredit might increase its investment in Germany, given the positive economic outlook.
UBS's auditor issued an "adverse opinion" on the bank's internal controls over financial reporting for 2024, citing unresolved issues from its acquisition of Credit Suisse. The bank acknowledged material weaknesses in its financial reporting due to the complexities of integrating the two institutions and ongoing remediation efforts. UBS is under scrutiny as it navigates these legacy challenges, which have raised concerns among investors and regulators.
UBS's 2024 annual report reveals that auditors Ernst&Young raised concerns about the bank's internal controls over financial reporting, particularly regarding issues inherited from the Credit Suisse takeover. As of December 31, 2024, UBS was deemed to have ineffective internal controls, a rare adverse opinion that signals potential misstatements in financial statements and could misrepresent the bank's financial health. UBS continues to address these internal control challenges stemming from the merger, which complicates its assessment process.
UBS's auditors issued an "adverse opinion" on the bank's internal controls over financial reporting for 2024, citing unresolved misstatements from its acquisition of Credit Suisse. This rare rebuke indicates potential misrepresentation in UBS's financial statements, highlighting challenges in integrating the two banks. The bank acknowledged material weaknesses in its internal controls and is working on a remediation program, though it did not specify a timeline for resolution.
Tommy Reggiori Wilkes
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