UBS first-quarter revenue halves as prices of outdated poisonous debt mount By Reuters

By Noele Illien

ZURICH (Reuters) -UBS Group put aside more cash to attract a line underneath its involvement in poisonous mortgages, dealing a heavy blow to first-quarter revenue because it prepares to combine fallen rival Credit score Suisse.

Switzerland’s largest financial institution reported a 52% slide in quarterly revenue, having put aside an extra $665 million to cowl the prices of the U.S. residential mortgage-backed securities that performed a central function within the world monetary disaster.

“We’re in superior discussions with the US Division of Justice, and I’m happy that we’re making progress towards resolving the legacy matter which dates again 15 years,” stated Chief Govt Sergio Ermotti, who has newly rejoined the financial institution to steer the takeover.

Web revenue attributable to shareholders got here in at $1 billion, versus the $1.7 billion common of 15 analyst estimates in a UBS-conducted ballot.

The world’s largest wealth supervisor additionally reported inflows of $42 billion within the first three months of the yr. Its flagship wealth administration division obtained $28 billion in web new cash, $7 billion of which got here within the final ten days of March.

In its annual report final yr, UBS described the way it had been an issuer and underwriter of U.S. residential mortgage-backed securities within the 5 years to 2007.

In November 2018, U.S. authorities commenced authorized motion in opposition to the Swiss financial institution, in search of penalties for its involvement in scores of such offers. UBS subsequently misplaced a courtroom case on the matter.

Scandal-plagued Credit score Suisse was delivered to its knees after purchasers left in droves amid world banking sector turmoil. Beneath the deal unexpectedly engineered by Swiss authorities, UBS agreed to take it over for 3 billion Swiss francs and to imagine as much as 5 billion francs in losses.

Credit score Suisse stated on Monday that 61 billion francs ($68 billion) in belongings had left the financial institution within the first quarter and that outflows had been persevering with, underscoring the problem confronted by UBS.

Throughout the world monetary disaster, it was UBS, not Credit score Suisse, that took the lion’s share of help from the state.

At the moment, the Swiss central financial institution lent greater than $54 billion to a car that UBS used to dump downside debt, together with subprime loans.

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