Where do you go once you’ve reached the top of a mountain? Swiss bank UBS has climbed so far ahead of most of its European rivals that they are out of sight. For its stock to go anywhere at all from here, it needs to convince investors that there are higher summits to scale.
Annual results on Tuesday highlighted the challenge facing UBS and its boss Sergio Ermotti: profits blasted through expectations, but its shares slid almost 6 per cent, making it the worst performer on the Swiss Market index. It is one of the least popular big European banks among sell-side analysts, with just half rating it a “buy”.
Some of the pressures are outside the bank’s control. Swiss regulators are working on new “too big to fail” rules that will probably lead to increased capital requirements. UBS is pushing hard for a “proportionate” response, warning that punitive restrictions would make it uncompetitive at a time when other big markets are moving in the opposite direction.