One of the "big three" credit ratings agencies has upgraded UBS.

UBS, the world’s largest wealth manager, had the credit rating for its main business lines raised by Moody’s Investors Services. The agency said the bank's wealth management focus and cuts in risks at the investment banking side justified the upgrade.

The long-term issuer and senior-unsecured debt ratings of UBS, which comprises the group’s main banking and wealth-management businesses, were raised one level to Aa3. The long-term deposit rating was upgraded by one notch to Aa2. The outlook was changed to stable. 

Moody’s said the change was merited because any earnings volatility in UBS’s remaining capital markets functions will be “sufficiently mitigated” by the Zurich-listed firm’s large wealth and asset management arms, and its Swiss universal banking business.

“The rating agency believes that these stable businesses provide solid 'shock absorbers' and sufficient loss absorption capacity safeguarding the group's profitability and capital position even under more adverse market conditions,” Moody's said.

UBS, which was bailed out by the Swiss taxpayer in the financial crisis of a decade ago, said the lender has restructured its investment bank in a “meaningful” way, simplifying this part of the bank and cutting need for capital. Also, potential lawsuit costs stemming from old legacy cases were unlikely to hit its capitalisation and margins.

The group recently merged its wealth management business lines under a single umbrella, drawing together its operations in the Americas, Europe and Asia. Like some other international banks, it has focused considerable wealth management energy on Asia. 

Swiss banks like UBS and its main rival, Credit Suisse, have contended with the unwinding of decades-old Swiss bank secrecy laws and demands from foreign governments for information about people using Swiss accounts to stash undeclared money. Also, Swiss banks currently contend with negative official interest rates in Switzerland, which bite into margins.