UBS Curbs Sale of Some FX Products to Retail Clients After Losses

(Bloomberg) — UBS Group AG is temporarily restricted from selling complex currency derivatives to Swiss retail clients after the practice plunged some buyers into deep losses last year, highlighting how the issue has reverberated through the Swiss bank.

The lender now offers the products — known as range target profit forwards, or RTPFs — only to professional investors in its home market, according to people familiar with the matter. The national financial regulator Finma has also started an investigation into the matter, they said, asking not to be identified discussing the private matter.

UBS is still in the process of compensating some clients for the losses they have incurred on the products, the people said.

Spokespeople for UBS and Finma declined to comment.

The matter caused public outrage in Switzerland last year when it emerged that wealth management clients with relatively little trading experience suffered losses on contracts sold by UBS. The Swiss Association for the Protection of Investors has said that private clients with medium to large assets were particularly affected, including older people without specialist knowledge.

UBS has been trying to put the issue to rest and it has made what it called “goodwill payments” to clients it views as not having fully understood the risks associated with the complex investment products. Chief Executive Officer Sergio Ermotti has said the losses incurred by clients don’t point to deeper problems at the Swiss lender.

The matter affected “less than 200 clients,” he said on Bloomberg TV last July.

The bank has reviewed the role of six relationship managers involved in the sales, people familiar with the matter said last year.

–With assistance from Bastian Benrath-Wright, William Shaw and Vassilis Karamanis.

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