Libor fines leave UBS with quarterly loss

UBS, the Swiss bank with huge offices in Broadgate, lost SFr1.9 billion (£1.3 billion) in the final quarter of 2012 after it was hit with £994 million of fines for Libor-rigging.

The bank, which is cutting back on investment banking activities and concentrating on wealth management, also reduced its bonus pool for bankers by 7% and said it would pay much of those bonuses in bonds which could lose all their value if the bank got into trouble again.

Despite the losses the bank also launched SFr5 billion of its own bonds today, with chief executive Sergio Ermotti saying it could afford to do so because of the way it had reduced the riskiness of its balance sheet. He said: “We made decisive progress in executing our strategy last year and started 2013 in a strong position.”

The bank is in the process of cutting 10,000 jobs worldwide to reduce costs.

UBS also announced a 50% increase in the dividend to SFr0.15p a share.

But analysts noted that wealth management, which Ermotti wants to be the core business, saw a much lower inflow of new money in the final quarter than expected, at SFr2.4 billion — less than half the average forecast by analysts.

The business has been hit by withdrawals by European customers worried about increasingly vocal attacks on Switzerland for helping tax avoidance.

“Despite the lack of progress on certain bilateral tax treaties, we remain confident that our asset-gathering businesses as a whole will continue to attract net new money,” UBS said.