The impact of Brexit on London’s financial sector came into stark relief as a judge approved plans by a UBS Group AG unit to shift some of its UK business — involving assets valued at more than 32 billion euros (US$36.5 billion) — to Germany.
The Swiss bank’s plans are a response to the “external shock” of Britain’s exit from the EU, not designed for “commercial advantage” or based on any “internal rationalization,” said Judge Alastair Norris in London, who approved the proposal on Tuesday.
The goal is to keep operations going amid uncertainty about the post-Brexit future of “passporting” rights, which allow financial companies to market products and services in any EU country without having to set up a branch there. Earlier on Tuesday, when the bank’s lawyers applied for permission to make the changes, they cited a “real and immediate risk” that UBS may lose the right to conduct some operations in the EU.
The bank’s equity trading venue is staying in London, even as rivals accelerate plans to shift trading elsewhere in Europe.
UBS is the latest bank to go to court for permission to activate Brexit plans, with the country’s scheduled departure now just weeks away. Last week Barclays PLC got the green light to transfer large parts of its business from Britain to its Dublin-based subsidiary if needed.
UBS plans to transfer the operations of its British unit, UBS Ltd, to its German unit, UBS Europe SE, on March 1, making the German business big enough to be regulated by the European Central Bank. The business being transferred involves assets of more than 32 billion euros, according to UBS’ court filings.
It includes deposit taking and some operations in equities, foreign currency and credit, as well as some of the bank’s corporate client solutions function, which covers structured finance, lending, equity capital markets, debt capital markets, leveraged capital markets and mergers-and-acquisitions work. Fewer than 200 jobs are expected to be transferred.
Before the UK unit is dissolved, some of its operations in cash equities, rates and credit, and exchange-traded derivatives — mostly business with “exempt clients” that does not need to move abroad because of Brexit — will be transferred to UBS’ London branch. Those operations cover about 15 percent of the British unit’s assets and 43 percent of profits.
UBS has “diligently assessed the impact” of its plans and sought to lessen it, Norris said in his judgement. Its plans strike “an appropriate balance” between providing certainty to clients and coping with the “exigencies of transferring to a different jurisdiction,” he said.
UBS set out plans in March last year to move operations to Europe. The court hearing was the last step in implementing them.
CHIP WAR: Tariffs on Taiwanese chips would prompt companies to move their factories, but not necessarily to the US, unleashing a ‘global cross-sector tariff war’ US President Donald Trump would “shoot himself in the foot” if he follows through on his recent pledge to impose higher tariffs on Taiwanese and other foreign semiconductors entering the US, analysts said. Trump’s plans to raise tariffs on chips manufactured in Taiwan to as high as 100 percent would backfire, macroeconomist Henry Wu (吳嘉隆) said. He would “shoot himself in the foot,” Wu said on Saturday, as such economic measures would lead Taiwanese chip suppliers to pass on additional costs to their US clients and consumers, and ultimately cause another wave of inflation. Trump has claimed that Taiwan took up to
SUPPORT: The government said it would help firms deal with supply disruptions, after Trump signed orders imposing tariffs of 25 percent on imports from Canada and Mexico The government pledged to help companies with operations in Mexico, such as iPhone assembler Hon Hai Precision Industry Co (鴻海精密), also known as Foxconn Technology Group (富士康科技集團), shift production lines and investment if needed to deal with higher US tariffs. The Ministry of Economic Affairs yesterday announced measures to help local firms cope with the US tariff increases on Canada, Mexico, China and other potential areas. The ministry said that it would establish an investment and trade service center in the US to help Taiwanese firms assess the investment environment in different US states, plan supply chain relocation strategies and
WASHINGTON POLICY: Tariffs of 10 percent or more and other new costs are tipped to hit shipments of small parcels, cutting export growth by 1.3 percentage points The decision by US President Donald Trump to ban Chinese companies from using a US tariff loophole would hit tens of billions of dollars of trade and reduce China’s economic growth this year, according to new estimates by economists at Nomura Holdings Inc. According to Nomura’s estimates, last year companies such as Shein (希音) and PDD Holdings Inc’s (拼多多控股) Temu shipped US$46 billion of small parcels to the US to take advantage of the rule that allows items with a declared value under US$800 to enter the US tariff-free. Tariffs of 10 percent or more and other new costs would slash such
Hon Hai Precision Industry Co (鴻海精密) is reportedly making another pass at Nissan Motor Co, as the Japanese automaker's tie-up with Honda Motor Co falls apart. Nissan shares rose as much as 6 percent after Taiwan’s Central News Agency reported that Hon Hai chairman Young Liu (劉揚偉) instructed former Nissan executive Jun Seki to connect with French carmaker Renault SA, which holds about 36 percent of Nissan’s stock. Hon Hai, the Taiwanese iPhone-maker also known as Foxconn Technology Group (富士康科技集團), was exploring an investment or buyout of Nissan last year, but backed off in December after the Japanese carmaker penned a deal