Update: UBS Group AG and UBS AG

The stable outlook reflects our view of UBS' strong resilience through periods of elevated market stress because of its asset-gathering-focused business model and credit portfolio dominated by collateralized lending. We could lower the rating over the next two years if there were a severe setback in the economic prospects and asset prices that significantly weakened UBS' asset quality and earnings. While being more unlikely, we could also lower the rating if the outstanding litigation results in significant charges exceeding provisions, leading to a drop in the risk-adjusted capital (RAC) ratio to below 10%. A one-notch downward revision of the group SACP to 'a-' would likely result in a one-notch downgrade of UBS Group AG but would be unlikely to affect

...UBS' global scale, diversification, and focus on its asset-gathering business are its key differentiators and underpin its superior stability and financial strength amid volatile market conditions. UBS' revenue pool is dominated by largely predictable and stable contributions from its leading global wealth and asset management divisions that generate favorable risk-adjusted returns. UBS has global scale, and its profile is well diversified by geography and currency. In addition, UBS' leading market position in Switzerland's domestic banking market has contributed to strong business stability that partly offsets complexity and revenue volatility intrinsic to its investment-banking activities. We principally compare UBS ('a' group stand-alone credit profile [SACP]) with other large, diversified international banks and we consider Credit Suisse ('###' SACP) and Morgan Stanley ('a' SACP) to be the closest peers because, like UBS, both combine material wealth management and investment bank businesses....

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