UBS AG, Switzerland’s biggest bank, has said it expects a ‘modest’ net profit in the third quarter as gains from wider credit spreads and the sale of bonds helped cushion the $2.3 billion loss from unauthorized trading.
See the Slide Show >>> Insider Trading ScandalsIn an attempt to shore up investor confidence, the bank said that a small profit was expected, together with a net inflow of money at its flagship private banking arm.
Last month, UBS said that it may be unprofitable in the quarter after discovering the massive trading scandal by London-based trader Kweku Adoboli. Chief Executive Officer Oswald Gruebel resigned from the top-post on September 24, saying the trading incident has “worldwide repercussions.”
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The fresh blots on the bank’s reputation, after its near collapse during the 2008/09 financial crisis, had raised fears of renewed withdrawals from the bank’s wealthy clients. However, analysts believe that the trading scandal and abrupt departure of Gruebel has reputational damage that might still affect customer behavior.
31 year old Adoboli, who remains in custody in London, was arrested on September 15 and charged with fraud and false accounting that may have resulted in the loss. He has yet to enter a plea.