UBS Chairman Axel Weber warned on Tuesday that the beleaguered European banking sector was still facing many challenges, particularly on the regulatory and capital front, and that the European Central Bank (ECB) was likely to wait and see how its policies do before changing course.
"Markets are still difficult, you can really see that the support that equity markets had, in particular, through very expansionary monetary policy, is fanning off. Global liquidity is still in a very difficult place and we're seeing people adjust portfolio positions," Weber told CNBC on the sidelines of the International of International Finance (IIF) meeting in Madrid.
"Given the uncertainty in markets, many of our clients are stepping away from trading. Even in wealth management, the uncertain environment means that a lot of the clients sit on cash and avoid long-term decisions and really are not very active and that's a very difficult model to be in….It's a difficult environment still."
Europe's banking sector saw a turbulent start to the year when banking stocks took a bruising in markets on concerns of their profitability, exposure to slumping energy prices, regulatory hurdles and fears over non-performing loans in some banks, particularly those in Italy.