UBS is to withdraw from the wealth management and commercial banking sectors in India, in a move highlighting the difficulties some foreign firms face in the BRIC economy.

The Zurich-listed bank has begun to close down its operations in India as part of its global strategy to shift focus to the company’s core strengths in its active markets that draw on less capital - demonstrating how the firm is seeking to move towards a less capital-intensive business model, this publication understands.

The closure - due to happen over the course of two years or slightly longer - will not affect offshore operations, nor UBS's service to the non-resident Indian market. Also, the UBS Securities India (Private) Ltd business will continue, and the firm aims to increase investment in that operation. 

The change is a demonstration of how UBS, and some other major peers, are cutting back in markets where they either fail to achieve the critical mass required to make a business profitable, or because firms, facing tougher international capital rules and regulations, are moving into different fields. 

This is not the first time – if the stories are confirmed – that a non-domestic India bank has pulled out of the India market. In May, Morgan Stanley sold the Indian arm of its wealth management business to Standard Chartered.

About 50 jobs will be lost as a result of the changes. UBS has held scheduled bank status from the Reserve Bank of India since March 2009.