to achieve satisfactory returns, suggesting market expectations of the Swiss investment bank are too high.
Justifying their underweight position on UBS compared to the neutral industry view, the analysts said that while the market environment may be challenging, competitors focusing on niche products were "generating much higher RoEs ." Along with questions of organisation, the note also questions whether more broadly, it would make sense to "break up" the UBS group, and whether the "costs of size are more than outweighing the benefits?"
However, the note called into question whether the current business model could optimize returns, and whether the profitability potential of the group could in fact decline further from here.The note suggested the profitability of UBS' wealth business is being "diluted away" and called into question the bank's heavy focus on its investment bank, along with its emphasis on ultra-high net worth clients.
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