New regulations have made the City a less desirable place to do business, UBS group chief executive Sergio Ermotti has said.
"London has lost a lot of attractiveness for sure," Ermotti told an audience in Canary Wharf tonight, pointing to the controversial Senior Managers Regime (SMR), which is set to to go into effect in March.
“If you add the regulatory regime of the UK about the single person responsibilities, and in the broader terms that is quite demanding, I can see why people would come back and say I would rather do my global job out of New York or Hong Kong or Singapore, why bother being in London?” Ermotti said.
Under the SMR, senior managers at banks will be held accountable to the Financial Conduct Authority (FCA) and the Prudential Regulatory Authority (PRA) for any regulatory violations that occur within their areas of responsibility.
The Treasury had originally proposed that under the regulations, senior executives would be forced to prove their innocence when misconduct happened under their watch. But Treasury officials made a U-turn in October, saying a "duty of responsibility" would instead be applied.
Ermotti was speaking at an event at Thomson Reuters, where he was also asked about how Britain leaving the European Union would affect UBS.
Ermotti said that while UBS economists are predicting a so-called Brexit would not be a "huge disaster" for the wider economy in the short term, the UK leaving the EU would prompt the Swiss bank to re-evaluate its British operations.
"It would have a clear repercussions on what we do in this country over time," Ermotti said.
But Ermotti said that European financial services would "lose" if the UK leaves the EU, with no other European capital able to replace London as a global financial hub.
"It’s going to be very difficult to replicate London."