The costs to fund UBS investment bank, were it to become a wholly independent unit from its parent group, could translate into a pre-tax hit of about Sfr1.4bn ($1.6bn), as the unit would be perceived as riskier without the backing of UBS’ retail and wealth management divisions, analysts have warned.

The bank could be forced to separate its investment banking unit by the Swiss regulator, following the tax-payer funded rescue of UBS two years ago, The Wall Street Journal reported today.