Thu, Mar 12, 2009 page10

• Swiss bank UBS posts US$18bn loss

  • BLOOMBERG
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  UBS AG, Switzerland’s biggest bank, posted a loss of 20.9 billion Swiss francs (US$18 billion) for last year — more than initially reported — and said it remained “extremely cautious” about the outlook for this year.

  The full-year net loss widened by SF1.19 billion from the figure reported on Feb. 10 because of costs to settle a US tax investigation and additional writedowns on securities, the Zurich-based bank said in its annual report, published yesterday. UBS fell as much as 3.9 percent in Swiss trading.

  UBS agreed on Feb. 18 to pay US$780 million and disclose the names of about 300 secret account holders to avoid US criminal prosecution on a charge that it helped wealthy Americans evade taxes.

  The bank also marked down securities that haven’t yet been transferred to the Swiss National Bank’s fund as part of a government aid package following record losses.

  “Our near-term outlook remains extremely cautious,” UBS chairman Peter Kurer and CEO Oswald Gruebel said in a letter to shareholders.

  UBS hired Gruebel, the former head of rival Credit Suisse Group AG, last month to replace Marcel Rohner to restore investor confidence. Last week, the bank nominated Kaspar Villiger, a former Swiss finance minister, as a new chairman of its board of directors, replacing Kurer.

  UBS had fallen 18 centimes, or 1.8 percent, to SF9.61 by 9:37am in Zurich. The shares are down 35 percent so far this year, compared with a 33 percent decline in the 65-company Bloomberg Europe Banks and Financial Services Index.

  UBS’ loss is the biggest in Switzerland’s history. The bank amassed more than US$50 billion in writedowns and losses since the beginning of the financial crisis, forcing it to raise more than US$32 billion in capital from investors, including the Swiss government, and to cut 11,000 jobs.

  Financial institutions worldwide have reported US$1.2 trillion of losses and shed more than 284,000 jobs since the US subprime mortgage market collapsed, data compiled by Bloomberg show. The US, Britain, France and Germany are among nations that injected billions into banks to prevent a wider financial calamity following the September collapse of Lehman Brothers Holdings Inc.

  UBS plans to further cut risks, reduce assets on the balance sheet and lower costs this year to return the bank “as soon as possible to a sustainable level of overall profitability,” Kurer and Gruebel’s letter said.

  While reporting earnings on Feb. 10, Rohner said the bank would have a profit this year.

  Rohner, who was the highest-paid member of the executive board last year, received total compensation of SF1.8 million. Kurer’s compensation was SF1.57 million, UBS said.

  UBS is fighting a US lawsuit that seeks to force the disclosure of as many as 52,000 names of US customers who allegedly hid their Swiss accounts from tax authorities.

  The bank said yesterday that net new money at its wealth management Americas unit “remains positive.”

  Those gains have been partially offset by withdrawals at the wealth management and Swiss bank division. The asset management unit is also experiencing further client redemptions, UBS said.

  Clients of the bank’s money-managing units pulled SF226 billion from the bank last year. In the fourth quarter, the only area where UBS saw an inflow of new money was in the US, where the bank hired almost 400 brokers.

  The bank lured advisers from rivals by offering signing bonuses of as much as 260 percent of the revenue they brought in over the previous 12 months, two anonymous sources said last month.
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