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August 5, 2009

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Home » Business » Finance

UBS spills less red ink in 2nd quarter

By Ernst E. Abegg | August 5, 2009, Wednesday | Print Edition

HARD-HIT Swiss bank UBS AG, beset by a United States tax evasion probe, posted a second-quarter loss of 1.4 billion Swiss francs (US$1.3 billion) yesterday in an improvement over the first three months of the year.

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 395 million franc loss for the same period of 2008, 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 last 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 J. Gruebel and Chairman Kaspar Villiger said the results were in line with expectations that it will 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'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 1.98 billion francs.

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