Swiss bank UBS is in a healthier position now than a year ago when it required a massive state bailout, according to the head of the state financial regulator.
On October 16, 2008, the government pumped SFr6 billion ($5.88 billion) into the ailing bank and allowed it to dump some SFr40 billion of toxic assets into a special central bank fund.
Eugen Haltiner, president of regulatory body Finma (the Swiss Financial Market Supervisory Authority), told Swiss radio on Friday that the measures had successfully propped up UBS. "UBS is certainly now in a more stable situation that it was a year ago," he said.
Haltiner's comments echoed those of Swiss parliamentary finance commission president Fabio Abate in August, who said UBS would not need any further state aid as "the fire is out".
The bank recorded losses of SFr1.4 billion in the second quarter, taking its total deficit for the year to SFr3.4 billion. But this was better than the SFr20 billion losses it suffered for the whole of 2008.
However, Haltiner said UBS – along with all major banks in the world – were not out of the woods just yet. He warned that future shocks could still derail the current signs of recovery in the financial markets.
In August UBS finally saw the back of a legal fight with the United States tax authorities, but at the cost of lifting the veil of secrecy on 4,450 client accounts.
As a consequence, the bank faces a long road to restoring confidence in its prestigious wealth management division, that continues to leak clients.
Two months ago, the Swiss government sold its initial SFr6 billion stake in UBS for a profitable SFr7.2 billion. UBS was recently told it could not buy back the remaining SFr23 billion worth of risky assets from the central bank toxic fund.