* Improvement of last 2 years is sustainable-CEO
* Investment bank services indispensible for wealth manager
* Chairman sees poorly coordinated national regulation
* CEO says bank should stay "independent and Swiss"
(Adds shareholder comment, compensation vote)
By Emma Thomasson
BASEL, April 28 UBS AG UBSN.VX called for a
year's delay to stringent Swiss capital rules to allow more
clarity on international regulation, while striking a more
conciliatory note by vowing to keep its base in Switzerland.
Chairman Kaspar Villiger told the bank's annual
shareholders' meeting on Thursday that UBS was not threatening
to relocate abroad and was aware of the advantages of being
based in Switzerland, but wanted to highlight the risks of
tightening rules ahead of other states.
"It is ... not clear why Switzerland needs to rush ahead
with legislation before we have a better idea of what is really
happening internationally. Even in just one year's time we would
have a much better idea," he said.
"It is precisely because we are committed to Switzerland as
a financial centre... that we are trying, despite all the
criticism, to avoid unnecessarily weakening Switzerland."
UBS Chief Executive Oswald Gruebel has said stiff Swiss
capital standards -- which the government sent to parliament
last week and hopes to get be approved this year -- could force
the bank to move units abroad. [ID:nLDE73K06O]
Several Swiss shareholders expressed anger at the AGM that
UBS could suggest leaving the country after the government
bailed out the bank at the height of the financial crisis.
"I am glad we are having this AGM in Switzerland and not in
the Bahamas or Panama City," joked author and bank critic Rene
Zeyer. "They have learned nothing, understood nothing. It's full
speed ahead into the next catastrophe."
The bank had reported first-quarter earnings on Tuesday
which showed money pouring back into its core wealth management
arm, while its struggling investment bank did better than
expected, although it said it might have to reassess some of its
activities in light of international regulations.
"I am confident that the remarkable financial improvement
that we have achieved in the last two years is sustainable,"
Gruebel said, adding UBS should stay "independent and Swiss".
Gruebel said the "too big to fail" reform was an emotional
topic and admitted UBS had sometimes adopted the wrong tone in
the debate, but said the bank should not be silent on the
subject just because of the mistakes it made in the past.
"If Switzerland is the only country to place a
disproportionate burden on its big banks, it could lose some of
the prosperity it has gained," he said.
The UBS comments contrast with remarks from Credit Suisse
CEO Brady Dougan, who said he did not expect the Swiss rules to
have a big impact on his bank's competitive position and sees
progress towards a more level playing field internationally.
Villiger said "poorly coordinated national regulation often
drawn up under populist political pressure" would force big
banks to exploit regulatory differences, warning that many
businesses would migrate to less tightly controlled markets.
"In this difficult environment, we, as a global bank, 80
percent of whose shareholders are non-Swiss, must seek the
optimum structure for our business," he said.
Villiger noted that independent advisory firm Autonomous
Research calculated that 30 billion Swiss francs ($34.22
billion) could be distributed to shareholders if UBS sold its
Swiss retail and corporates business, used the proceeds to boost
its investment bank and shifted its head office to New York.
Meanwhile, the popular right-wing Swiss People's Party (SVP)
has proposed that the big banks split off their U.S. divisions,
separating investment banking from wealth management.
But Villiger and Gruebel defended the integrated bank model,
saying investment banking provided important services for Swiss
firms and was also indispensible for a global wealth manager.
Despite a cut to the bonus pool of 11 percent in 2010 and
Gruebel forgoing his bonus again, shareholders are still unhappy
with the pay structure, with 32 percent voting against the UBS
compensation report, down from around 40 percent last year.
Villiger said the bank would keep working to improve its
compensation structure, noting ongoing criticism from
influential shareholder groups, but said it could not go too far
without losing staff: "We must be competitive in the sector."
(Editing by Alexander Smith and Sophie Walker)
($1=.8766 Swiss Franc)