UBS Says Financial Risks Could Materialize in Two Years

UBS Chairman Axel Weber warns that the current good run of the world finance and economy could potentially end in the coming couple of years.

At present, the world economy faces one of its best years in terms of subdued inflation and accommodative monetary conditions since the global financial crisis.

“We’re at the end of a long recovery and, two to three years from now, at the latest, some of the risks could materialize,” Weber said at the Spring Meetings of the International Monetary Fund (IMF) along with the World Bank.

“The recession risks are increasing,” he added.

This week, the IMF kept its predictions for the global growth for 2018 at 3.9 percent, which would be the quickest growth rate since 2011. However, the agency cautioned that global debt levels have already hit record highs. They also advised governments to begin decreasing their indebtedness. The IMF said that these governments should build cushions for the “challenges that will unavoidably come in the future.”

Weber also said that financial institutions should prepare for such dangers and risks. He added he thinks banks have become better-armed and well-prepared compared to how they were before the last financial crisis.

Trade War not Happening – UBS

Weber echoed many other industries when he said that he doesn’t think the current economic and trade spat between the US and China will escalate into a full-blown trade war.

However, he claimed that it’s high time for the World Trade Organization to reassess China’s roles in the global trade economy. China is currently the world’s second largest economy, and predictions have been given that it will grow to be the world’s largest.

Weber said that global companies from different parts of the world should be permitted to do their businesses in China with fewer restrictions.

Last year, UBS became the first foreign bank to obtain a license to operate in China with a wholly-owned asset management unit. It now serves domestic institutional and high-net-worth investors.

“When we do business in China, we do it in the form of joint ventures. We should be able to go in on our own or partnerships in Chinese subsidiaries above 50 percent or even 100 percent. That’s the way global institutions should be able to do business in China,” Weber said.

UBS Handles Cross-Border Business for Europe

Meanwhile, UBS is set to become the handler of cross-border business for Western Europe from two regional units. The move is believed to help the offshore business to differing regulations, according to an internal memo.

“The separation between Europe International North and South allows us to take strategic decisions based on market access regulations, which are tighter in southern Europe than in the north,” said Christine Novakovic, who is the bank’s new head of wealth management for the Middle East, Africa, and Europe.

HQBroker is here to give you a daily news roundup about the forex, commodities, technologies, automobiles, and economies. You can open an account now and make yourself updated with essential news in the market. Share your thoughts and experiences with us by commenting your HQBroker reviews.