UBS remains in the red in third quarter
Swiss bank UBS has reported its fourth consecutive quarterly loss, but says it believes business is returning to normal.
The net loss of SFr564 million ($542 million) reported on Tuesday followed higher-than-expected accounting charges of SFr2.15 billion.
It is the second quarterly loss under new chief executive Oswald Grübel.
The bank said the accounting charges resulted from currency exchange loss from the sale of its Brazilian unit UBS Pactual, and the conversion of mandatory convertible notes issued to the Swiss government as part of a bailout.
“In the last two quarters we have been addressing the bank’s most critical problems. Business is steadily returning to normal. We see this in a clear improvement in our financial performance,” Grübel said commenting on the results.
“Having stabilised the bank’s financial condition and resized the business, I expect to see further progress in future quarters, particularly in 2010.”
However, he noted that the progress would depend on the market and other factors.
Rebuilding confidence
Grübel added that the settlement of legal action with the United States’ tax authorities and the decision of the Swiss government to exit its investment in UBS were having a profound impact on efforts to rebuild confidence in the bank and on staff morale.
Operating income rose four per cent to SFr5.77 billion compared with the same period last year – and the bank said discounting the one-time accounting charges it would have made a pre-tax profit of SFr1.56 billion.
The result is narrower than the SFr1.4 billion net loss in the second quarter of 2009 but larger than average analyst forecasts.
Analysts had been looking for signs of recovery at UBS’s wealth management division, which has been struggling to resurface from the subprime crisis.
Analysts expected on average a third-quarter net loss of SFr207 million. But forecasts had ranged from a loss of SFr1.4 billion to a profit of SFr800 million.
The results contrast with profits at Switzerland’s biggest bank Credit Suisse.
swissinfo.ch and agencies
UBS is attempting to restore profits after becoming the worst European victim of the subprime crisis.
Its problems started to become apparent in July 2007, when chief executive Peter Wuffli stepped down following the collapse of the bank’s hedge fund Dillon Read Capital Management.
In October 2007, UBS said it would cut 1,500 jobs in its investment banking arm. Chairman Marcel Ospel stepped down in April 2008.
In October last year, the Swiss National Bank (SNB) was forced to inject SFr6 billion ($5.29 billion) into UBS. A facility was also set up to allow the bank to bin up to $60 billion of toxic assets.
This bailout did not prevent the bank from posting a SFr20 billion loss for 2008.
UBS has also been haunted by a US investigation that accused the bank of helping wealthy Americans illegally evade $200 billion in taxes. It was forced to pay $780 million in fines and hand over some confidential client data.
In February, Oswald Grübel replacing Marcel Rohner as chief executive.
In compliance with the JTI standards
More: SWI swissinfo.ch certified by the Journalism Trust Initiative
You can find an overview of ongoing debates with our journalists here. Please join us!
If you want to start a conversation about a topic raised in this article or want to report factual errors, email us at english@swissinfo.ch.