Hard-hit Swiss bank UBS AG, beset by a US tax evasion probe, yesterday reported a second-quarter loss of 1.4 billion Swiss francs (US$1.3 billion) in an improvement over the first three months of the year.
On a year-on-year basis, however, the bank, which has been struggling to recover from major losses in the US mortgage crisis, said the result was more than three times the SF395 million loss it posted for the same period last year, when UBS was also saddled with writedowns of US$5.1 billion.
The bank has been in the middle of a US-Swiss legal battle over the Internal Revenue Service’s search for US tax evaders. The two governments said on Friday they reached a settlement in the case in which thousands of wealthy Americans are suspected of hiding billions of dollars with the Swiss banking giant.
Swiss media have reported that under the deal, whose details are still being worked out, the bank will escape paying a fine, but will have to hand over the names of 5,000 investors where there is strong evidence of tax evasion.
Chief executive Oswald Gruebel and chairman Kaspar Villiger said the results were in line with expectations that it would take time to turn the business around.
“While our second-quarter results were clearly unsatisfactory, they show significant progress towards returning to profitability and restoring client trust,” they said in a letter to shareholders.
The bank said that on the bright side it had achieved a “significant reduction in legacy risk positions and associated losses, including lower credit loss expenses.”
The bank, once the largest wealth manager in the world, said the outflows of money rose sharply in the quarter as investors pulled out assets. The net new money outflow in the quarter was SF39.4 billion (US$37 billion), compared with SF14.9 billion in the first quarter.
The bank’s payroll dropped 4,400 employees during the quarter to 71,806.
UBS said the results were an improvement over the first quarter, when the loss was SF1.98 billion. The second quarter benefited from lower losses on risk positions from businesses now exited or in the process of being exited.
It said the second quarter results were significantly affected by a charges of more than SF2 billion for own credit on financial liabilities designated at fair value, restructuring and goodwill impairment for the sale of a subsidiary.
The bank had said it would report a loss, and the amount was in the range expected by analysts.
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