The operational structure of the Group comprises the Group Functions and four business divisions:
- Global Wealth Management
- Personal & Corporate Banking
- Asset Management
- Investment Bank
UBS's financial statements provide segment reporting by its business divisions and Group Functions. In addition, the discussion of UBS's results provides further details of our results at a business unit level. This reporting structure is shown in the following table:
Global Wealth Management
Global Wealth Management
Personal & Corporate Banking
Personal & Corporate Banking
Audit is an integral part of corporate governance. While safeguarding their independence, the external auditors closely coordinate their work with Group Internal Audit (GIA). The Audit Committee and, ultimately, the BoD supervise the effectiveness of audit work.
External independent auditors
The Annual General Meeting in 2020 re-elected Ernst & Young Ltd (EY) as auditors for the Group for a one-year term of office. EY assumes virtually all auditing functions according to laws, regulatory requests and the Articles of Association.
More information on the external auditors is disclosed in the annual report 2020.
Group Internal Audit
Group Internal Audit (GIA) performs the internal auditing role for the Group. It is an independent function that provides expertise and insights to confirm controls are functioning well and highlight where UBS needs to better manage current and emerging risks. In 2020, it operated with an average headcount of 582 full-time equivalent employees.
GIA supports the BoD in discharging its governance responsibilities by taking a dynamic approach to audit, issue assurance and risk assessment, calling attention to key risks in order to drive action to prevent unexpected loss or damage to the firm’s reputation. To support the achievement of UBS’s objectives, GIA independently, objectively and systematically assesses the:
(i) soundness of the Group’s risk and control culture;
(ii) reliability and integrity of financial and operational information, including whether activities are properly, accurately and completely recorded, and the quality of underlying data and models; and
(iii) design, operating effectiveness and sustainability of:
- processes to define strategy and risk appetite, as well as the overall adherence to the approved strategy;
- governance processes;
- risk management, including whether risks are appropriately identified and managed;
- internal controls, specifically whether they are commensurate with the risks taken;
- remediation activities; and
- processes to comply with legal and regulatory requirements, internal policies, and the Group’s constitutional documents and contracts.
Audit reports that include significant issues are provided to the Group CEO, relevant GEB members and other responsible management. The Chairman, the Audit Committee and the Risk Committee of the BoD are regularly informed of such issues.
In addition, GIA provides independent assurance on the effective and sustainable remediation of control deficiencies within its mandate, taking a prudent and conservative risk-based approach and assessing at the issue level whether the root cause and the potential exposure for the firm have been holistically and sustainably addressed. GIA also cooperates closely with risk control functions and internal and external legal advisors on investigations into major control issues.
To maximize GIA’s independence from management, the Head GIA reports to the Chairman of the BoD and to the Audit Committee, which assesses annually whether GIA has sufficient resources to perform its function, as well as its independence and performance. In the Audit Committee’s assessment, GIA is sufficiently resourced to fulfill its mandate and complete its auditing objectives. GIA’s role, position, responsibilities and accountability are set out in our Organization Regulations and the Charter for GIA, available at ubs.com/governance. The latter also applies to UBS AG’s internal audit function. GIA has unrestricted access to all accounts, books, records, systems, property and personnel, and must be provided with all information and data that it needs to fulfill its auditing responsibilities. GIA also conducts special audits at the request of the Audit Committee, or other BoD members, committees or the Group CEO in consultation with the Audit Committee.
GIA enhances the efficiency of its work through coordination and close cooperation with the external auditors.
Compliance with NYSE listing standards on corporate governance
As a foreign company with shares listed on the New York Stock Exchange (the NYSE), UBS Group AG also complies with all relevant corporate governance standards applicable to foreign private issuers.
Differences from corporate governance standards relevant to US-listed companies
The NYSE listing standards on corporate governance require foreign private issuers to disclose any significant ways in which their corporate governance practices differ from those that have to be followed by domestic companies. Such differences are discussed below.
Responsibility of the Audit Committee regarding independent auditors
Our Audit Committee is responsible for the compensation, retention and oversight of independent auditors. It assesses the performance and qualifications of external auditors and submits proposals for appointment, reappointment or removal of independent auditors to the BoD. As required by the Swiss Code of Obligations, the BoD submits its proposals for shareholder vote at the Annual General Meeting (the AGM). Under NYSE standards audit committees are responsible for appointing independent auditors.
Discussion of risk assessment and risk management policies by the Risk Committee
As per the Organization Regulations of UBS Group AG and UBS AG, the Risk Committee, instead of the Audit Committee, as per NYSE standards, oversees our risk principles and risk capacity on behalf of the BoD. The Risk Committee is responsible for monitoring our adherence to those risk principles and monitoring whether business divisions and control units maintain appropriate systems of risk management and control.
Supervision of the internal audit function
Although under NYSE standards only audit committees supervise internal audit functions, the Chairman of the BoD (the Chairman) and the Audit Committee share the supervisory responsibility and authority with respect to the internal audit function.
Responsibility of the Compensation Committee for performance evaluations of senior management of UBS Group AG
In line with Swiss law, our Compensation Committee, together with the BoD, proposes for shareholder approval at the AGM the maximum aggregate amount of compensation for the BoD, the maximum aggregate amount of fixed compensation for the Group Executive Board (the GEB) and the aggregate amount of variable compensation for the GEB. The members of the Compensation Committee are elected by the AGM. Under NYSE standards it is the responsibility of compensation committees to evaluate senior management’s performance and to determine and approve, as a committee or together with the other independent directors, the compensation thereof.
Proxy statement reports of the Audit Committee and the Compensation Committee
NYSE standards require the aforementioned committees to submit their reports directly to shareholders. However, under Swiss law all reports to shareholders, including those from the aforementioned committees, are provided to and approved by the BoD, which has ultimate responsibility to the shareholders.
Shareholder votes on equity compensation plans
NYSE standards require shareholder approval for the establishing of and material revisions to all equity compensation plans. However, as per Swiss law, the BoD approves compensation plans. Shareholder approval is only mandatory if equity-based compensation plans require an increase in capital. No shareholder approval is required if shares for such plans are purchased in the market.
Criteria for defining external Board members' independence
Our Organization Regulations require three-quarters of the BoD members to be independent.
As a general rule for a Board of Director (BoD) member to be considered independent, he or she may not have any material relationship1 with UBS2, either directly or as a partner, controlling shareholder or executive officer3 of a company that has a material relationship with UBS.
In addition, in order to be considered independent, our BoD members have to fulfill the additional criteria our BoD has established based on the requirements set forth in the New York Stock Exchange listing standards on corporate governance, the FINMA Circular 2017 / 1 Corporate governance - banks and the standards established in the Swiss Code of Best Practice for Corporate Governance. These criteria are as follows:
A director will not be considered independent, if he or she
- is or has been an employee of UBS within the last three years.
- has an immediate family member4 who is or has been an executive officer of UBS within the last three years.
- has received or has an immediate family member who has received during any twelve-month period within the last three years more than USD 120,000 in direct compensation from UBS (other than director and committee fees).
- is a current partner or a current employee of UBS’s internal or external auditors.
- has an immediate family member who is a current partner or a current employee (personally working on UBS's audit), of UBS's internal or external auditors.
- was or an immediate family member was within the last three years a partner or employee of UBS's internal or external auditors and personally worked on UBS’s audit within that time.
- or an immediate family member is or has been within the last three years employed as an executive officer of a company where any of UBS’s present executive officers at the same time serves or served on that company’s compensation committee.
- is a current employee of a company that has made payments to or received payments from UBS in any of the last three fiscal years in excess of the greater of USD 1 million or 2% of the consolidated gross revenues of the director’s company.
- has an immediate family member who is a current executive officer of a company that has made payments to or received payments from UBS in any of the last three fiscal years in excess of the greater of USD 1 million or 2% of the consolidated revenues of the director’s company.
- or his/her immediate family members and/or companies controlled5 by him or her have banking relationships with UBS that are not in the ordinary course of business and on substantially the same terms as those prevailing at the time for comparable transactions with other clients.
- does not hold a qualified holding6 in UBS Group AG or UBS AG, and does not represent the owner of such a qualified holding.
- has entered into consulting contracts with UBS.
- holds any other Board mandates that might infringe on his independence.
All Audit Committee and Risk Committee members are required to be independent. A director will not qualify as “independent” under the tightened independence requirements for members of the Audit Committee if he or she:
- accepts directly or indirectly any consulting, advisory or other compensatory fees from UBS, other than compensation for Board and Board Committee services.
- holds directly or indirectly UBS shares in excess of 5% of the outstanding capital.
In addition, each Audit Committee member must not serve on the audit committees of more than two other public companies. The Board may approve exceptions from this rule if the simultaneous service does not impair the ability of the director to fulfill his mandate. Such exceptions would be disclosed and explained in our annual reports.
We provide regular information to our shareholders and to the financial community.
We fully support transparency, and consistent and informative disclosure. We aim to communicate our strategy and results in a manner that allows stakeholders to gain a good understanding of how our Group works, what our growth prospects are, and the risks that our businesses and our strategy entail. We assess feedback from analysts and investors on a regular basis and, where appropriate, reflect this in our disclosures. To continue achieving these goals, we apply the following principles in our financial reporting and disclosure:
- transparency that enhances the understanding of economic drivers and builds trust and credibility;
- consistency within each reporting period and between reporting periods;
- simplicity that allows readers to gain a good understanding of the performance of our businesses;
- relevance, by focusing not only on what is required by regulation or statute but also on what is relevant to our stakeholders; and
- best practice that leads to improved standards.