UBS remains in profit despite 'rogue' losses

Click to follow
The Independent Online

UBS attempted to shore up investor confidence yesterday by announcing that it would make a small profit in the third quarter despite a £1.5bn loss from alleged rogue trading.

The Swiss banking giant also said it expected a net inflow of money at its flagship private banking arm.

However, the "modest" quarterly profit was generated by one-off items and the alleged unauthorised trading was revealed in mid-September, leaving limited time for unhappy clients to withdraw their money.

The surprise profit came from a gain of about Sfr1.5bn (£1.1bn) on the revised value of UBS's own debt and a Sfr700m profit from selling "treasury-related investments".

UBS said its third-quarter result would be hit by the loss allegedly inflicted by Kweku Adoboli, a London-based trader. Discovery of the loss resulted in the departure of the bank's chief executive, Oswald Grübel, late last month.

The fresh blots on the bank's reputation, after its near-collapse during the financial crisis, raised fears of renewed withdrawals by the bank's wealthy clients.

The bank said flows of funds into its wealth management arm were about the same in the third quarter as in the previous quarter, when net deposits were Sfr5.6bn.

Mr Grübel's interim replacement, Sergio Ermotti, is due to unveil plans for a slimmed-down investment bank next month. The bank said it was on track for cost cuts that will involve shedding about 3,500 jobs.

UBS shares rose 1.6 per cent to Sfr10.25 yesterday, making the bank a rare gainer on a day when European financial stocks were again hit hard by fears over the eurozone debt crisis.

Comments