UBS suffers as European clients withdraw their cash
Source: Agencies |
February 6, 2013, Wednesday
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Print Edition
Print Edition
UBS saw weak client inflows at its flagship private bank in the fourth quarter as it reported a hefty net loss due to a US$1.5 billion fine for rigging interest rates and restructuring costs.
Switzerland's biggest bank announced plans in October to fire 10,000 staff as it focuses on wealth management and ditches much of the trading business that ran up US$50 billion in losses in the financial crisis and prompted the rate rigging fine.
But the wealth management business that is now the key to its future success delivered just 2.4 billion francs (US$2.64 billion) in fresh client money compared to average analyst forecasts for 6.8 billion.
While inflows in fast-growing markets like Asia were healthy, withdrawals by clients in western Europe - where Switzerland is under fire for helping tax cheats - sped up towards the end of the quarter, UBS said.
Its chief financial officer, Tom Naratil, said Germany's rejection mid-December of a tax deal with Switzerland had contributed to the outflows.
However, the wealth management Americas business saw net new money of US$8.8 billion, its highest rate of fourth-quarter inflows since 2007 and double analyst forecasts.
"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.
UBS has warned it could lose 12-30 billion Swiss francs from total European assets under management of over 300 billion as a result of steps to stop foreigners using secret accounts.
UBS reported a 1.89 billion franc loss in the fourth quarter largely due to the fine it agreed in December for rigging Libor and other benchmark interest rates and charges from its plan to shed staff. UBS is seeking to reduce its risky assets in a bid to meet tougher regulations aimed at preventing a repeat of the 2008 financial crisis.
Switzerland's biggest bank announced plans in October to fire 10,000 staff as it focuses on wealth management and ditches much of the trading business that ran up US$50 billion in losses in the financial crisis and prompted the rate rigging fine.
But the wealth management business that is now the key to its future success delivered just 2.4 billion francs (US$2.64 billion) in fresh client money compared to average analyst forecasts for 6.8 billion.
While inflows in fast-growing markets like Asia were healthy, withdrawals by clients in western Europe - where Switzerland is under fire for helping tax cheats - sped up towards the end of the quarter, UBS said.
Its chief financial officer, Tom Naratil, said Germany's rejection mid-December of a tax deal with Switzerland had contributed to the outflows.
However, the wealth management Americas business saw net new money of US$8.8 billion, its highest rate of fourth-quarter inflows since 2007 and double analyst forecasts.
"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.
UBS has warned it could lose 12-30 billion Swiss francs from total European assets under management of over 300 billion as a result of steps to stop foreigners using secret accounts.
UBS reported a 1.89 billion franc loss in the fourth quarter largely due to the fine it agreed in December for rigging Libor and other benchmark interest rates and charges from its plan to shed staff. UBS is seeking to reduce its risky assets in a bid to meet tougher regulations aimed at preventing a repeat of the 2008 financial crisis.
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