Despite A US$2.3 Billion Trading Scandal, UBS Sees Profit for Q3
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As casino banking goes, banking heavyweight UBS has announced that it expects a ‘modest profit’ when it reports third quarter results later this month, despite a rogue trading scandal that wiped out $3 billion.
As casino banking goes, banking heavyweight UBS has announced that it expects a ‘modest profit’ when it reports third quarter results later this month, despite a rogue trading scandal that wiped out $3 billion.
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.
In 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.”
Related: Inside the mind of UBS ‘rogue’ trader
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.
[quote]”The news of third quarter profit is not as positive as it may appear at first glance, because the gains UBS booked have nothing to do with normal business,” said Dirk Becker, a Frankfurt-based analyst at Kepler Captial Markets. “It’s rather disappointing.”[/quote]
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.
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