Bloomberg

(Bloomberg) -- Andrea Orcel, president of UBS Group AG’s securities unit, said tougher financial regulation and negative interest rates are among global factors sapping confidence as investors increasingly question investment banks’ ability to earn money.

The U.S. election, “Brexit,” sanctions against Russia and the migrant crisis in the Middle East are among factors that put “everyone in a position of wait and see,” Orcel said in an interview with Bloomberg TV’s Erik Schatzker in New York on Friday. “The pressure has never been as high to reshape our model to something that can hold water and convince our shareholders that it’s worthwhile investing in us.”

The world’s largest investment banks have seen declining revenue, hurt by record-low interest-rates, plunging oil prices and cooling emerging markets. While UBS pivoted its strategy toward wealth management in 2012, shrinking the securities business and eliminating thousands of jobs to shore up profitability, the shares have lost about a quarter of their value this year amid a wider selloff among European investment banks.

Orcel said that investors are questioning investment banks’ models, strategies, business practices and returns, with the industry going through a “seismic change.”

“As everybody tries to respond to these questions, everybody is taking a number of very difficult decisions,” he said. “From a UBS standpoint, we’re hoping we’re making the right decisions.”

--With assistance from Jan-Henrik Förster To contact the reporter on this story: Jeffrey Vögeli in Zurich at jvogeli@bloomberg.net. To contact the editors responsible for this story: Simone Meier at smeier@bloomberg.net, Cindy Roberts, Jon Menon

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