Swiss Bank loses £48m on securities

Swiss Bank Corporation's highprofile advance in the City's corporate finance rankings has not shielded it from from making a loss of SFr86m (£48m) in securities trading, which contributed to a drop of two-thirds in trading income last year.

The loss contrasted to a SFr1.25bn profit for securities trading in 1993. SBC said the loss on securities trading was chiefly due to collapsing bond prices following the unexpected US interest rate rise last spring.

Swiss Volksbank analyst Andre Meier said SBC's results were "disappointing." He said net profit declined more than expected and that the decline in provisions came in much lower than expected.

This was despite a 34 per cent fall in provisions to SFr1.17bn. Mr Meier added that SBC's results were the worst reported among Switzerland's three biggest banks.

SBC's chairman, George Blum, said that, according to first estimates, the group's results in January and February were "in line with budget."

"We do not have any final figures and trading conditions continue to be difficult" he said.

Mr Blum said he hoped that despite the current difficulties the group will be able to "come close to a return on equity of 10 per cent within the next two to three years", although he added that this would require normal market conditions.

SBC increased its derivatives activities dramatically in 1992, Mr Blum said, and claimed that the company's reporting and risk control systems were fully up to scratch.

Marcel Ospel, head of the international and finance divisions, said that while trading in interest rate derivatives declined in 1994 and continued to contract in the current year, there was scope for further expansion in equity derivatives, while the volume of trading in currency derivatives was expected to remain stable.