UBS Faces Significant Impact of Swiss Government Currency Protection Change

Swiss government today lifted its protection on the strength of the Swiss franc.  The immediate impact is to significantly strengthen the Swiss franc against the US dollar and the Euro.  For Swiss corporate giants such as UBS which earn significant revenue in US dollar-denominated currency, the danger is that when these revenues are restated for Swiss accounting purposes, they will result in much lower revenue when expressed as Swiss dollars.

The impact will be somewhat eased by the fact that UBS also already holds a significant asset base in Swiss francs.  The value of these UBS holdings was instantly boosted by today’s action.  In any event, this action will assuredly impact how UBS executes its global growth strategy, and how it allocates its internal investments.

–Tim Shields, UBS

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