Swiss bank UBS facing a huge loss
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The Associated Press
Oluşturulma Tarihi: Şubat 11, 2009 00:00
ZURICH - The losses of Switzerland’s UBS reach 8.1 billion Swiss francs ($6.9 billion) during the fourth quarter of 2008 due to trading losses and leveraged loan impairments. The bank, which will refocus on domestic markets, also reveals plans to lay off 2,000 of its employees
Swiss bank UBS said yesterday it made a larger-than-expected loss of 8.1 billion Swiss francs ($7.57 billion) in the fourth quarter and announced it would cut a further 2,000 jobs as it refocuses on its home market.
The results fell short of analyst estimates of a net loss of 6.2 billion francs ($5.79 billion). A year earlier Switzerland's biggest bank had reported a net profit of 1.33 billion francs. The latest results bring its full-year loss to 19.7 billion francs for 2008.
The figures could have been worse had UBS not benefited from an accounting adjustment that improved fourth-quarter results by 3.4 billion francs before tax. UBS chief executive Marcel Rohner expressed cautious optimism for the coming year.
"We have worked hard to address our challenges and I can confidently say that we made substantial progress on all fronts," he said after at a presentation in Zurich. "We had an encouraging start to the new year, but the environment will remain very difficult and volatile as the real economy has not seen the worst yet," Rohner added, noting that net new money inflows in January were positive.
Net new money
This compared with net new money outflows of 85.8 billion francs from its wealth and asset management businesses during the fourth quarter. Net new money is an important indicator of future business in the banking sector.
UBS said it plans to refocus on its core activity in Switzerland, its international wealth management franchise, and its global onshore business. To this end it will create two new business units. Wealth management and Swiss bank will be led by Franco Morra and Juerg Zeltner, while wealth management Americas will be led by Marten Hoekstra.
In a move that caused some concern among analysts, the bank said it will only take $39.1 billion of the $60 billion offered by the Swiss national bank to buy out toxic assets - shaky securities that have become difficult or impossible to value because the market for them has dried up. Zuercher Kantonalbank said the decision increased UBS's risk exposure.
UBS is also shedding 2,000 jobs at its loss-making investment banking unit, which has been blamed for many of the bad investment choices that have seen the bank write down tens of billions of francs (dollars) since mid-2007. By the end of the year the investment bank will have cut its head count to 15,000 from 22,666 in the third quarter of 2007.
Bonuses delayed
UBS said it will pay staff bonuses of 2.2 billion francs for the year. Further payments of 1.6 billion francs will be delayed until 2010. The bank has been embroiled in a fierce public debate over bonus payments since taking up a bailout offer from the Swiss government last year. UBS had already announced in November that its chief executive, chairman and the executive board will receive no bonus payments for 2008. Since then several former top officials also have declined or handed back million-dollar payments.
The bank said it remains the subject of several investigations, including a tax evasion probe in the United States. The Internal Revenue Service has requested that UBS hand over details on U.S. clients suspected of having avoided paying taxes by hiding money in offshore accounts with the bank's knowledge.
UBS warned investors that other countries might follow the lead of U.S. authorities and investigate the bank's cross-border wealth management business. "It is premature to speculate as to the scope or effect of any such reviews," UBS said.
The results fell short of analyst estimates of a net loss of 6.2 billion francs ($5.79 billion). A year earlier Switzerland's biggest bank had reported a net profit of 1.33 billion francs. The latest results bring its full-year loss to 19.7 billion francs for 2008.
The figures could have been worse had UBS not benefited from an accounting adjustment that improved fourth-quarter results by 3.4 billion francs before tax. UBS chief executive Marcel Rohner expressed cautious optimism for the coming year.
"We have worked hard to address our challenges and I can confidently say that we made substantial progress on all fronts," he said after at a presentation in Zurich. "We had an encouraging start to the new year, but the environment will remain very difficult and volatile as the real economy has not seen the worst yet," Rohner added, noting that net new money inflows in January were positive.
Net new money
This compared with net new money outflows of 85.8 billion francs from its wealth and asset management businesses during the fourth quarter. Net new money is an important indicator of future business in the banking sector.
UBS said it plans to refocus on its core activity in Switzerland, its international wealth management franchise, and its global onshore business. To this end it will create two new business units. Wealth management and Swiss bank will be led by Franco Morra and Juerg Zeltner, while wealth management Americas will be led by Marten Hoekstra.
In a move that caused some concern among analysts, the bank said it will only take $39.1 billion of the $60 billion offered by the Swiss national bank to buy out toxic assets - shaky securities that have become difficult or impossible to value because the market for them has dried up. Zuercher Kantonalbank said the decision increased UBS's risk exposure.
UBS is also shedding 2,000 jobs at its loss-making investment banking unit, which has been blamed for many of the bad investment choices that have seen the bank write down tens of billions of francs (dollars) since mid-2007. By the end of the year the investment bank will have cut its head count to 15,000 from 22,666 in the third quarter of 2007.
Bonuses delayed
UBS said it will pay staff bonuses of 2.2 billion francs for the year. Further payments of 1.6 billion francs will be delayed until 2010. The bank has been embroiled in a fierce public debate over bonus payments since taking up a bailout offer from the Swiss government last year. UBS had already announced in November that its chief executive, chairman and the executive board will receive no bonus payments for 2008. Since then several former top officials also have declined or handed back million-dollar payments.
The bank said it remains the subject of several investigations, including a tax evasion probe in the United States. The Internal Revenue Service has requested that UBS hand over details on U.S. clients suspected of having avoided paying taxes by hiding money in offshore accounts with the bank's knowledge.
UBS warned investors that other countries might follow the lead of U.S. authorities and investigate the bank's cross-border wealth management business. "It is premature to speculate as to the scope or effect of any such reviews," UBS said.