Hong Kong/Singapore: UBS Group AG has picked Frankfurt as its post-Brexit European Union hub and has made preparations for the worst-case scenario of Britain crashing out of the bloc without a trade deal, chief executive officer Sergio Ermotti said.

The Swiss bank made the decision a few weeks ago, Ermotti said in a Bloomberg Television interview in Singapore on Monday. While Germany’s financial centre will be the base, UBS will employ a multi-location strategy in the region, he said, naming offices in Madrid, Paris and Milan.

“The financial system is already operating on the assumption that there is no agreement," between the UK and EU, Ermotti said. “Whatever is going to happen from now onwards, it’s not going to make the exercise less expensive."

UBS has previously said it’s facing a bill of more than 100 million francs ($103 million) because of Brexit, including the cost of relocating staff from the City of London and legal bills. EU regulators have made it clear they expect banks to establish full-scale, standalone operations within the 27 remaining member states as soon as possible.

Ermotti said the impact of Britain’s decision to leave the EU has already been felt, with companies pulling back across the continent.

“It’s a complication that undermines the willingness to make investments," he said. “In the UK and in general in Europe this has been something that has prevented people taking action and investing for the future."

The trade dispute between the US and China is the biggest risk to the global economy, Ermotti said. The fight between the two countries may get worse before the situation improves, and is likely to trigger corrections as financial markets are already “fairly or highly priced", and investors’ conviction levels are not very high, he said.

China is considering declining the Trump administration’s offer of trade talks later this month after fresh American threats of tariffs, The Wall Street Journal reported on Sunday.

“Even if you have a resolution between the U.S. and other countries, tensions between China and the US are enough to create secondary effects," he said. “All the exporters into China and into the U.S. will suffer."

UBS has been recalibrating its asset allocation to be more neutral in equities and reduce exposure to emerging markets, Ermotti said. Industry consolidation may come in “the next couple of years," and the bank is open to “smaller acquisitions" that fit its presence in certain countries or local markets, he said.

Meanwhile, Asia continues to be the revenue driver, growing by mid-double digits every year, Ermotti said. The bank last week received licenses to distribute mutual funds and insurance policies via its wholly-owned UBS China Ltd., and expects approval for its application to take a majority stake in its China securities venture in the next couple of months, he said.