Swiss Bank UBS AG is winding up its banking business in India as part of its global strategy of accelerating its exit from what it describes as “capital intensive business”. The group will continue to be present in India as an investment bank which will house its corporate client service business.

UBS officials were not available for comment. Sources said that writing was on the wall for several months after the bank announced its global strategy to rationalize its business. Although UBS had a full-fledged banking licence in India, its focus was on wealth management clients providing forex, fixed income and credit services through its single branch in Mumbai.

UBS was in the news last year when its India chief Manish Girotra, who had been face of the bank for more than a decade, put in her papers. Girotra was replaced by Aashish Kamath, who heads India operations. Ashish Vaidya, head of FICC trading, is among the senior employees of the bank.

The winding-up, which will take place over two years, would result in loss of around 50 jobs. The bank is understood to have communicated its intention to the Reserve Bank of India and will be surrendering its banking licence. The bank may, however, seek to make an application for a representative office.

Bankers feel that UBS may have chosen to give up its bank licence to get out of RBI’s regulatory oversight. Cost of compliance with banking regulation is expected to go up worldwide with central bankers increasing capital requirements. RBI has indicated that it will nudge foreign banks to set up local subsidiaries which would be regulated much more intensely.

What makes the decision surprising is that the India business for UBS has been a highly profitable one. According to data provided by RBI in its “profile of banks”, UBS profit was Rs 312 crore in FY12 and Rs 579 crore in FY11.

The bank had a capital base of close to Rs 2,000 crore as on end-March 2012, including reserves and surplus. It had deposits of Rs 631 crore as on end March 2012 and investments of Rs 3,796 crore and advances of Rs 685 crore.