UBS criticised a report issued earlier this week by Standard & Poor’s, the rating agency, which put the Swiss banking and wealth management firm in the bottom quintile of 45 major banks as ranked by their capital strength. UBS said the rating agency had greatly under-stated its true capital position.

In its report, S&P said UBS’s risk-adjusted capital ratio was 2.2 per cent below the average RAC of 6.7 per cent for the banks it surveyed. The data was based on figures collected as at 30 June this year, the report said.

The Zurich-listed firm said yesterday that the rating agency’s estimate was far too low.

“The report issued by Standard & Poor's is not representative of UBS's capital position in relation to its peers. The bank's risk-adjusted capital ratio is estimated to be 7.1 per cent,” it said in a statement. The bank said the S&P figures did not take account of the SFr6 billion mandatory convertible notes that fully converted in August 2009 and SFr13 billion of MCNs due to convert in March next year.

According to the S&P report issued on Monday, HSBC, the UK-listed bank, had the highest RAC, of 9.2 per cent, followed by French-Belgian bank Dexia, at 9.0 per cent, then ING, at 8.9 per cent. The two latter banks have, ironically, both received public bailout funds. In fourth place, was Nordea, at 8.8 per cent, then Groupe Credit Mutuel, at 8.6 per cent.

In the bottom quintile, Citigroup’s RAC rating was even worse than for UBS, at 2.1 per cent, and the lowest ratio was for Mizuho Financial Group, at 2 per cent.

In its report, S&P said: “We are, however, also seeing a clear improvement in banks' risk-adjusted capital positions, compared with the level in 2007. Beyond fulfilling the short-term goals of alleviating market pressure, responding to the uncertain economic environment, and addressing strategic considerations, banks appear to have started to prepare for a future structural increase in regulatory capital requirements as well.”

“Capital raising, conversion of hybrids into common equity, asset disposals, and reduction in risk assets have allowed a number of banks to significantly increase their capital ratios in the past 18 months,” its report said.