News Column

Libor Scandal Pushes UBS Into the Red

Feb 5, 2013

UBS bank said Tuesday that it made a net loss of 2.51 billion Swiss francs (2.76 billion dollars) last year, owing to fines for interest-rate rigging and restructuring costs.

Switzerland's largest bank had made a profit of 4.1 billion francs in 2011.

UBS said it planned to reduce the burden of its interest payments by buying back 5 billion francs of its own bonds.

At the same time, bonuses for managers were reduced to 2.5 billion francs, 7 per cent lower than in the previous year. UBS also announced a new bonus system that will result in deferred payouts and lower cash payments.

The bank's stocks gained 0.58 per cent in the first hour of trading at the Zurich Stock Exchange, as analysts had predicted an even higher loss.

The lender was given a record fine of 1.5 billion dollars by US and British regulators in December, for its role in the Libor interest rate scandal that involved several major banks.

UBS is in the process of reducing its investment banking business, which led to write-downs of more than 3 billion francs of the company's value.

The bank's income from trading dropped nearly 20 per cent to 3.48 billion francs, while net interest income fell 12 per cent to 5.99 billion francs.

At the same time, the wealth management branch of UBS attracted 47 billion dollars of new assets, especially from Asian customers and from super-rich clients. This was a significant rise from the 36 billion that flowed into the bank in the previous year.

UBS was hit by the financial crisis between 2007 and 2009 and was bailed out by the Swiss state.

Besides reducing its investment banking, the bank has started other restructuring programmes and is in the process of shedding 10,000 further jobs.

Chief executive Sergio Ermotti said the bank would have an advantage over other major banks also this year because of its financial strength and its strong client base. "This allows us to restore client confidence while we execute our strategy and address challenges of the past," he said.

For more stories on investments and markets, please see HispanicBusiness' Finance Channel

Source: Copyright 2013 dpa Deutsche Presse-Agentur GmbH

Story Tools Facebook Linkedin Twitter RSS Feed Email Alerts & Newsletters