UBS profit halved due to US lawsuit – Kommersant
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Net profit of UBS in the first quarter amounted to $1.03 billion, which is 52% lower than in the same period last year, follows from reporting companies. As a result, the bank’s shares at the opening of trading on the Swiss stock exchange lose about 4% in price.
The main reason for such a sharp decline in the bank’s profits was a trial in the United States dating back to 2018. Then the American authorities filed sued UBS, accusing the bank of fraud. On the eve of the 2008 crisis, authorities said, UBS misled investors into buying securities backed by bad mortgages by not giving them full risk information. In total, the bank sold such securities for a total of $41 billion.
UBS, unlike many other banks, refused to pay the US authorities $ 2 billion as part of the settlement of the case and decided to prove its innocence in court. Now, the bank has set aside $665 million to cover legal costs associated with this case.
The bank is aiming to settle the lawsuit as soon as possible to instill confidence in investors and Credit Suisse customers, who should become customers of UBS after the merger of the two banks. UBS CEO Sergio Ermotti told CNBC that talks with US authorities over the mortgage case are “at an advanced stage” and the bank hopes to reach an agreement soon.
UBS reported a significant influx of customer funds in the first quarter, about $42 billion. Of this, $28 billion went to its asset management division, with a quarter of that amount received by the bank in the last ten days of March, that is, after the announcement of the deal with Credit Suisse.
Before Credit Suisse reported about making a profit for the quarter in the amount of 12.8 billion francs ($14.1 billion). However, this result is associated solely with the write-off of debt obligations of about 15 billion francs. Excluding these write-offs, Credit Suisse suffered a quarterly net loss of 1.3 billion francs, while its revenue fell 40% to 2.7 billion francs.
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