UBS posts four-fold increase in quarterly loss | The Daily Star
11:00 PM, August 04, 2009 / LAST MODIFIED: 11:00 PM, August 04, 2009

UBS posts four-fold increase in quarterly loss


Chief Operating Officer of Switzerland's UBS bank Oswald Gruebel speaks during a announcement of the bank's results for the first-half of 2009 in Zurich yesterday. UBS reported an almost quadrupled net loss of 1.4 billion Swiss francs in the second quarter. Photo: AFP

Swiss banking giant UBS reported on Tuesday an almost quadrupled net loss of 1.4 billion Swiss francs during the second quarter and warned that it needed more time to return to profitability.
The Zurich-based bank, one of the biggest losers in the global financial crisis, also failed to stem a haemorrhage of funds as customers withdrew assets amounting to 39.5 billion francs over the three months ending June 30.
"The outflow ... will continue in the America business," said the group's chief executive Oswald Gruebel, adding that it was "unlikely to see a quick reversal of the trend."
He also warned that "it will be a while" before the Swiss bank could return to profitability, although he said that it was "taking big steps in the right direction."
Unlike several international banks, which posted sharp gains in profits for the period, UBS on Tuesday posted its third quarterly loss in a row.
It said second-quarter net losses reached an equivalent of 916 million euros or 1.32 billion dollars, a substantial deepening of a loss of 358 million francs reported during the same period last year.
That net loss for the second quarter of 2008 has since been restated at 395 million francs, according to UBS's latest income statement.
The latest results contrasted starkly with those of fellow Swiss banking giant Credit Suisse, which posted a 29-percent leap in second quarter profits of 1.57 billion francs.
UBS said its earnings had been hit by a credit charge of 1.2 billion francs, restructuring charges of 582 million francs and impairment of 492 million francs in relation to the sale of UBS Pactual.
Switzerland's flagship bank was also unable to arrest an outflow of assets during the second quarter.
Its wealth management and Swiss bank division posted net new money outflows of 16.5 billion francs.
The bank's wealth management Americas division posted outflows of 5.8 billion francs and its global asset management division recorded an outflow of 17.1 billion francs.
John Cryan, the bank's chief financial officer, told journalists that outflows from Swiss clients was "much more stable" than the previous quarters, but that the "large majority" of the outflow was related to international clients.
The bank had been struggling to regain clients' confidence after losing almost 20 billion francs in 2008 on the US subprime crisis and its financial and economic fallout.
It is also beset by a lawsuit filed by US authorities seeking to ferret out Americans holding offshore bank accounts to evade taxes, a case which the bank said was hurting its bid to regain the trust of clients.
On Friday, both parties reached an agreement in principle to resolve the issue.
In a letter to shareholders outlining its second-quarter results, UBS looked forward to a "definitive resolution" of the case.
Pointing to the agreement in principle, it added: "This is a positive development in a matter that has adversely affected our efforts to regain the trust of our clients and to restore momentum to our businesses."
Cryan would not give further details of the case.
Analysts at Bank Wegelin noted that the outflows at the bank were still "problematic" but that the deal with the United States should be helpful.
"More appears to be needed for a sustainable recovery, and the bank must prove that it can substantially improve its situation in the coming quarters, stop the outflow of clients' funds and make a profit," they said.
The bank's stock opened up 0.75 percent at 16.12 francs, but later turned negative. At 1010 GMT, it was trading down 4.75 percent at at 15.24 francs while the Swiss Market Index was down 0.82 percent.

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