|Page (1) of 1 - 10/04/11||email article||print page|
UBS expects Q3 profit despite $2.3 billion rogue trading loss
GENEVA (AP) ' Swiss banking group UBS said Tuesday it expects credit gains and bond sales to help it record a modest profit in the third quarter, despite a $2.3 billion rogue trading loss.
Only last month, Switzerland's biggest bank warned that it might be forced to report an overall loss for the three months ending in September in light of unauthorized trading from London-based trader Kweku Adoboli. The 31-year-old was arrested Sept. 15 and has been charged with fraud and false accounting.
The Zurich-based bank said it expects positive net new money in its wealth management businesses to be "broadly similar" to the second quarter, despite the trading loss and 400 million francs ($435 million) worth of restructuring charges due to cost-cutting. It added that the cost reduction program was on track with most of the affected employees notified.
In addition,UBS said it expects to benefit from credit gains elsewhere to the tune of about 1.5 billion Swiss francs ($1.6 billion), and book a 700 million francs profit from the sale of treasury-related investments by its wealth management and Swiss bank divisions.
UBS also said its capital position was "strong" even though the cushion required under international banking rules will "decline slightly" from 18.1 percent in the second quarter.
In a staff memo last week, the interim chief executive of UBS, Sergio Ermotti, described the $2.3 billion trading scandal as a "severe setback" to the bank's efforts to regain clients' trust.
Ermotti was appointed Saturday to replace former CEO Oswald Gruebel, who stepped down 10 days after the scandal broke and said he bore responsibility for the massive loss.
Under Gruebel's 2 -year leadership, UBS had begun to recover from massive subprime losses and an embarrassing U.S. tax evasion case, but it has been struggling to fully re-establish its reputation.
UBS is set to announce its third quarter results October 25.