Bloomberg reports UBS AG, Switzerland’s biggest bank, posted a 20.9 billion Swiss franc ($18 billion) loss for 2008, more than initially reported, and said it remains “extremely cautious” about the outlook for this year.
The full-year net loss widened by 1.19 billion francs from the figure reported on Feb. 10 because of costs to settle a U.S. tax investigation and additional writedowns on securities, the Zurich-based bank said in its annual report, published today.
UBS’s outlook follows more upbeat comments from New York- based Citigroup Inc. and Deutsche Bank AG of Frankfurt.
Banking shares, including UBS, rallied the past two days after Citigroup Chief Executive Officer Vikram Pandit said in an internal memo that his bank was having the best quarter since 2007, when it last posted a profit.
Deutsche Bank, which said revenue in January rose “significantly,” saw the trend continuing in February, CEO Josef Ackermann told Handelsblatt last week.
“I don’t think the first quarter for UBS is going as well as for Citigroup or Deutsche Bank,” said Dirk Becker, an analyst with Kepler Capital Markets in Frankfurt who has a “reduce” rating on the stock.
“UBS still has troubled assets on the balance sheet and problems with asset flows.” UBS rose 18 centimes, or 1.8 percent, to 9.97 francs by 11:39 a.m. in Swiss trading, compared with a 3.3 percent advance in the 65-company Bloomberg Europe Banks and Financial Services Index.
The shares are down 33 percent so far this year. Earnings ‘at Risk’ UBS agreed on Feb. 18 to pay $780 million and disclose the names of about 300 secret account holders to avoid U.S. criminal prosecution on a charge that it helped wealthy Americans evade taxes.
The bank also marked down securities that haven’t yet been transferred to the Swiss National Bank’s fund as part of a government aid package following record losses. “Our near-term outlook remains extremely cautious,” Chairman Peter Kurer and Chief Executive Officer Oswald Gruebel said in a letter to shareholders.
“Even after substantial risk reduction, our balance sheet remains exposed to illiquid and volatile markets and our earnings will therefore remain at risk for some time to come.” UBS hired Gruebel, the former head of rival Credit Suisse Group AG, last month to replace Marcel Rohner as CEO to restore investor confidence.
Last week, the bank nominated Kaspar Villiger, a former Swiss finance minister, as a new chairman of its board of directors, replacing Kurer. Cutting Risks, Costs The 2008 loss is the biggest in Switzerland’s history.
UBS amassed more than $50 billion in writedowns and losses since the beginning of the financial crisis, forcing it to raise more than $32 billion in capital from investors, including the Swiss government, and cut 11,000 jobs. Financial institutions worldwide have reported $1.2 trillion of losses and shed more than 284,000 jobs since the U.S. subprime mortgage market collapsed, data compiled by Bloomberg show.
The U.S., Britain, France and Germany are among nations that injected billions into banks to prevent a wider financial calamity following the September collapse of Lehman Brothers Holdings Inc. UBS plans to further cut risks, reduce assets on the balance sheet and lower costs this year to return the bank “as soon as possible to a sustainable level of overall profitability,” Kurer and Gruebel’s letter said.
While reporting earnings on Feb. 10, Rohner said the bank would have a profit in 2009. Rohner, who was the highest-paid member of the executive board last year, received total compensation of 1.8 million francs. Kurer’s compensation was 1.57 million francs, UBS said.
Client Investments UBS is fighting a U.S. lawsuit that seeks to force the disclosure of as many as 52,000 names of American customers who allegedly hid their Swiss accounts from tax authorities. The bank said today that net new money at its wealth management Americas unit “remains positive.”
Those gains have been partially offset by withdrawals at the wealth management and Swiss bank division.
The asset management unit is also seeing further client redemptions, UBS said. Clients of UBS’s money-managing units pulled 226 billion francs from the bank in 2008.
In the fourth quarter, the only area where UBS saw an inflow of new money was in the U.S., where the bank hired almost 400 brokers.
The bank lured advisers by offering signing bonuses of as much as 260 percent of the revenue they brought in over the previous 12 months, two people with knowledge of the matter said last month.