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UBS profits plunge 49 percent

Swiss banking giant UBS said Tuesday that its second quarter profits plunged 49 percent compared to a year ago as a strong Swiss franc bit into earnings and revenues slumped on economic uncertainty.

Published: 26 July 2011 09:10 CEST

Profits reached 1.015 billion francs ($1.266 billion) for the three months ending June compared to 2.005 billion francs a year ago, and the bank warned that it would probably miss its mid-term target.  

The Zurich-based bank added that it would slash 1.5 to 2.0 billion francs in costs over the next two to three years, a move which would force it to book “significant restructuring charges later this year.”  

“Banks returns have declined overall in the last 12 months, reflecting deleveraging and the actions being taken in advance of increased capital requirements,” said Oswald Gruebel, UBS chief executive.  

“We are responding to this changed environment and the weakening economic outlook by adapting our business and increasing efficiency.  

“While our target for pre-tax profit set in 2009 is unlikely to be achieved in the original timeframe, our strong competitive positioning and our capital strength give us confidence for the future,” added Gruebel.  

UBS had previously set a target to book pre-tax profits of 15 billion francs in the mid-term.  

Net new money for the second quarter was positive, reaching 8.7 billion francs, but just a fraction of the 22.3 billion francs recorded in the first quarter, said the bank.  

Its wealth management division recorded inflows for the Asia Pacific region and the European onshore business, but the European cross-border business posted outflows amid tighter scrutiny from tax authorities.  

The investment bank division meanwhile posted sharp falls in pre-tax profit to 376 million francs from 1.314 billion a year ago, as revenues slumped across the board.  

A levy imposed by Britain on bank liabilities that takes effect at the end of the second quarter is expected to shave about 100 million francs off the investment bank unit’s pre-tax earnings in the coming quarters.  

“Current economic uncertainty shows little sign of abating,” said the bank.  

“We therefore do not envisage material improvements in market conditions in the third quarter of 2011, particularly given the seasonal decline in activity levels traditionally associated with the summer holiday season, and expect these conditions to continue to constrain our results,” it warned.

BANK

Deutsche Bank to pay $130m to settle US bribery probes

Deutsche Bank will pay $130 million to settle a foreign bribery probe and fraud charges in precious metals trading, US officials announced on Friday.

Published: 9 January 2021 15:08 CET
Deutsche Bank to pay $130m to settle US bribery probes
A woman walks past the offices of Deutsche Bank in London. Photo: Tolga Akmen / AFP
The bribery case relates to illegal payments and to false reporting of those sums on the bank's books and records between 2009 and 2016, the Department of Justice said in a press release.
   
The bank “knowingly and wilfully” kept false records after employees conspired with a Saudi consultant to facilitate bribe payments of over $1 million to a decision maker, the DOJ said.
   
In another case, the bank paid more than $3 million “without invoices” to an Abu Dhabi consultant “who lacked qualifications… other than his family relationship with the client decision maker,” the DOJ said.
   
In addition to criminal fines and payments of ill-gotten gains, Deutsche Bank agreed to cooperate with government investigators under a three-year deferred prosecution agreement.
 
   
In the commodities fraud case, Deutsche Bank metals traders in New York, Singapore and London between 2008 and 2013 placed fake trade orders to profit by deceiving other market participants, the DOJ said.
   
The agreement took into account Deutsche Bank's cooperation with the probes, DOJ said.
   
“Deutsche Bank engaged in a criminal scheme to conceal payments to so-called consultants worldwide who served as conduits for bribes to foreign officials and others so that they could unfairly obtain and retain lucrative business projects,” said Acting US Attorney Seth D. DuCharme of the Eastern District of New York.
   
“This office will continue to hold responsible financial institutions that operate in the United States and engage in practices to facilitate criminal activity in order to increase their bottom line.”
   
“We take responsibility for these past actions, which took place between 2008 and 2017,” said Deutsche Bank spokesperson Dan Hunter, adding that the company has taken “significant remedial actions” including hiring staff and upgrading technology to address the shortcomings.
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