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DealBook: UBS Posts $1 Billion First-Quarter Profit

April 30, 2013 by Leave a Comment

The Swiss bank UBS in Zurich.Michael Buholzer/ReutersUBS is based in Zurich.

LONDON – The Swiss bank UBS, buoyed by strong performances in its wealth management and investment banking operations, reported first-quarter earnings on Tuesday that sharply exceeded analysts’ expectations.

Although the bank said profit fell to 988 million Swiss francs ($1 billion) from 1 billion francs in the period a year earlier, the results were much better than the 412 million francs predicted by a group of analysts surveyed by Bloomberg News.

Sergio P. Ermotti, the chief executive, said in a statement that he was very pleased with the performance. He cautioned that it was “too early to declare victory,” but said the earnings showed the company’s “business model works in practice.”

UBS announced a far-reaching overhaul of its business in October to adjust to tighter regulations and the effect of a sluggish European economy. The bank started to eliminate 10,000 jobs, reduce bonus payments, scale back its investment banking trading business and focus more on its successful wealth management operation.

It also sought to rebuild trust among clients and investors after its involvement in some recent scandals. The bank uncovered a $2.3 billion trading loss in 2011 connected with the activities of a former trader, Kweku M. Adoboli, who has since been sentenced to seven years in jail. In December, UBS said it would pay $1.5 billion in fines to settle a case related to the manipulation of the London interbank offered rate, or Libor.

UBS said pretax profit at the investment banking operation rose 92 percent, to 977 million francs. Stronger demand for its equity capital markets services offset a drop in its advisory and debt capital markets business, it said.

Net new money at its global wealth management business was 23.6 billion francs in the first quarter, compared with 10.9 billion francs in the period a year earlier. Pretax profit at wealth management outside the Americas fell 28 percent, to 664 million francs, while earnings at wealth management in the Americas rose 19 percent, to 251 million francs.

UBS has been cutting back more at its investment banking operation than Credit Suisse, its main rival in Switzerland. Mr. Ermotti, who took over UBS at the end of 2011, hired Andrea Orcel from Bank of America Merrill Lynch last year to help overhaul the unit.

Last week, Credit Suisse posted a profit of 1.3 billion francs in the first quarter, up from 44 million francs in the first quarter of 2012, when it booked a loss of 1.6 billion francs on the value of its own debt. The results were helped by a better performance of its investment banking operation.

Article source: http://dealbook.nytimes.com/2013/04/30/ubs-records-1-billion-first-quarter-profit/?partner=rss&emc=rss

Filed Under: Global Business Tagged With: , ,

DealBook: 2 More UBS Executives Quit Over Trading Loss

October 5, 2011 by Leave a Comment

Sang Tan/Associated PressKweku M. Adoboli, the former UBS trader accused of costing the bank $2.3 billion in losses, at the City of London Magistrates Court last month.

LONDON — UBS, the Swiss bank, said Wednesday that its co-heads of global equities had resigned over last month’s trading incident that resulted in a $2.3 billion loss.

Francois Gouws and Yassine Bouhara handed in their resignations because they took responsibility for the management of the equities operation, which is where the unauthorized trades occurred. UBS also said it would take “appropriate disciplinary action” against other individuals in the equities business and in other areas.

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“Their resignations come as they assume overall responsibility for the effective management of the equities business,” UBS said in a statement. UBS named Mike Stewart, who joined UBS from Bank of America Merrill Lynch in July, as head of global equities.

The departures of the equity co-heads came three weeks after a London trader, Kweku M. Adoboli, was arrested in the middle of the night and charged with fraud and false accounting, forcing UBS to announce a $2.3 billion trading loss.

The scandal prompted the resignation of Oswald J. Grübel as chief executive and UBS started an internal investigation into how a midlevel trader was able to circumvent the bank’s risk controls and pile up such a loss. Mr. Adoboli remains in police custody and has yet to enter a plea.

UBS’s chairman said previously that it was most likely that the trader acted alone and that the bank’s internal investigation was expected to be completed sooner rather than later. KPMG, the accounting firm, started a separate investigation into the incident on behalf of Swiss and British banking regulators.

UBS said Tuesday that it expected a “modest” profit in the third quarter despite the trading loss, partly because of the appreciation in value of its own outstanding debt. The bank is scheduled to report full third-quarter figures on Oct. 25.

Article source: http://dealbook.nytimes.com/2011/10/05/2-more-ubs-executives-quit-over-trading-loss/?partner=rss&emc=rss

Filed Under: Global Business Tagged With: , ,

DealBook: UBS Trader Accused of Fraud to Remain in Custody

September 23, 2011 by Leave a Comment

Kweku M. Adoboli, the former UBS traderSang Tan/Associated PressKweku M. Adoboli, the former UBS trader accused of costing the bank $2.3 billion in losses, at the City of London Magistrates Court on Thursday.

7:21 p.m. | Updated

LONDON — Kweku M. Adoboli, the UBS trader accused of costing the big Swiss bank $2.3 billion in losses, will remain in police custody until a hearing next month after his lawyer said in court on Thursday that Mr. Adoboli would not seek bail.

The British authorities, meanwhile, amended their charges against Mr. Adoboli, adding a second fraud charge for activities from October 2008 through 2010. Mr. Adoboli also faces two charges for false accounting. At the hearing, the prosecutor, David Levy, said Mr. Adoboli had “acted improperly” and that “he carried out reckless and inappropriate trades which he hid.”

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Mr. Adoboli’s lawyer, Patrick Gibbs, did not enter a plea at the hearing, but said Mr. Adoboli was “sorry beyond words for what had happened.”

He added, “He stands now appalled at the scale of the consequences of his disastrous miscalculations.”

Wearing a dark gray suit, crisp white shirt and dark blue tie, Mr. Adoboli briefly bowed toward the visitors’ gallery in the court with his hands crossed over his chest. In his second brief court appearance since his arrest a week ago, Mr. Adoboli — who looked tense sitting behind a glass wall in a packed room at the City of London Magistrates Court — spoke only to confirm his name, address and date of birth.

Mr. Adoboli, 31, was arrested on Sept. 15 at 3:30 a.m. on suspicion of fraud after UBS had alerted the police. Authorities filed fraud and false accounting charges the next day. UBS said Sunday that it had lost $2.3 billion as the result of unauthorized trades in equity index futures. Mr. Adoboli, according to the bank, masked those activities from internal risk controls with fictitious trades. Mr. Adoboli worked at the bank’s Delta One desk, focusing on exchange-traded funds.

The next court hearing in the case will be Oct. 20. Prosecutors met with Mr. Adoboli’s legal team on Thursday morning, agreeing to move up the court date.

While Mr. Adoboli was in court in London, UBS’s chief executive, Oswald J. Grübel, was at a board meeting in Singapore where executives discussed the future of the investment banking business and how to improve earnings by restoring investor and client confidence.

Article source: http://feeds.nytimes.com/click.phdo?i=e5556cdf7edb90254ccf83d50edfe770

Filed Under: Business News Tagged With: , ,

DealBook: UBS Trader to Remain in Custody

September 22, 2011 by Leave a Comment

LONDON – Kweku M. Adoboli, the UBS trader accused of costing the bank $2.3 billion in losses, is to remain in custody until a hearing next month after his lawyer said he would not apply for bail.

Authorities also amended the allegations against Mr. Adoboli, adding a fraud charge for activities from October 2008 through 2010. Mr. Adoboli also faces two charges for false accounting. The prosecutor, David Levy, said Mr. Adoboli “acted improperly” and that “he carried out reckless and inappropriate trades which he hid.”

Mr. Adoboli’s lawyer, Patrick Gibbs, did not enter a plea but said Mr. Adoboli was “sorry beyond words for what had happened.”

“He stands now appalled at the scale of the consequences of his disastrous miscalculations,” Mr. Gibbs said.

Wearing a dark gray suit, crisp white shirt and dark blue tie, Mr. Adoboli briefly bowed toward the visitors’ gallery in the court with his hands crossed over his chest. In his second brief court appearance since his arrest a week ago, Mr. Adoboli — who looked tense sitting behind a glass wall in a packed room at the City of London Magistrates Court — spoke only to confirm his name, address and date of birth.

Mr. Adoboli, 31, was arrested last Thursday at 3.30 a.m. on suspicion of fraud by abusing his position after UBS had alerted the police, with authorities levying fraud and false accounting charges the following day. UBS, in a statement on Sunday, said that it had lost $2.3 billion as the result of unauthorized trades in equity index futures. Mr. Adoboli, according to the financial firm, masked those activities from internal risk controls with fictitious trades. Mr. Adoboli worked at the bank’s Delta One desk, focusing on exchange-traded funds.

The next court hearing will be on Oct. 20. Prosecutors met with Mr. Adoboli’s legal team Thursday morning, agreeing to move up the court date.

While Mr. Adoboli attended court in London, UBS’s chief executive, Oswald J. Grübel, attended a board meeting in Singapore. The executives discussed the future of the investment banking business and how to improve earnings by restoring investor and client confidence.

Article source: http://feeds.nytimes.com/click.phdo?i=e5556cdf7edb90254ccf83d50edfe770

Filed Under: Business News Tagged With: , ,