UBS CEO: Risk Appetite 'Extremely Low'

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UBS CEO Sergio Ermotti warned on Tuesday that risk appetite remained low among clients after reporting weak client inflows.

The bank is focusing on its wealth management business and scaling back its trading activities significantly, shutting down its fixed income business.

"Clients' risk appetite is extremely low and interest rate margins are very low too. We need to see structural changes in [the] macro-economic environment to see more [client] activity and taking more risk," Ermotti told CNBC. He said the biggest risk to client activity were geopolitical events or a repeat of last year's U.S. fiscal cliff discussions which could continue to put pressure on margins.

He added that following last year's fine by regulatory authorities for the Libor rigging scandal that engulfed a number of high profile banks - UBS paid out around $1.5 billion at the end of 2012 - the bank had made "good progress" in addressing these issues.

"You're always going to have problems but many of those problems will be more and more industry wide, and of course, we are going to tackle them, but that's the reason we want to be strong in our capital position,and we what to be able to address these issues in a position of strength," he added.

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