Feb 2010:
UBS is struggling to restore its reputation after a damaging legal assault on its fund management business by US tax authorities.
The war of attrition by tax authorities on offshore fiscal havens has taken its toll on UBS, the Swiss bank, which lost SwFr56 billion (£34 billion) in client funds during final quarter of last year.
The net outflow of funds will continue in the short term, the bank warned, even as it reported its first quarterly profit since the beginning of the banking crisis.
UBS made SwFr1.2 billion in the final quarter of 2009 but the climb back to the black is overshadowed by the continuing drain of clients funds, aggravated by a tax amnesty offered by the Italian Government last year which cost the bank SwFr8 billion.
The outflow of SwFr6 billion was sharply higher than in the previous quarter when SwFr36 billion was withdrawn by clients.
"We expect that our return to profitability will increase clients' confidence and restore our reputation," he said. However, he added that the fund management arm remained under pressure. "In the immediate future [it] still expects to report outflows, with some pressure on margins."
The net profit of SWFr1.2 billion for the final quarter, compares with losses of SwFr564 million in previous quarter and a deficit of SwFr9.6 billion in the final quarter of 2008.
For the full year, UBS reduced its net loss from SwFr21.3 billion in 2008 to SwFR2.7 billion.
UBS is struggling to restore its reputation after a damaging legal assault on its fund management business by American tax authorities which forced the bank to hand over details of clients suspected of hiding funds within the Swiss institution.
Wealth Management Americas, the firm's US business, suffered a SwFr12 billion outflow in the fourth quarter, up from SwFr9.9 billion in the previous quarter as the business lost staff and struggled to hire new advisers.
The core Swiss wealth management arm suffered an outflow of SwFr33.2 billion compared with SwFR16.7 billion in the third quarter mainly due to the Italian tax amnesty.
The investment bank moved back into positive territory with a profit of SwFr297 million despite a market slowdown at the end of last year and smaller trading volumes in securities.
UBS said it could not predict whether a positive trading environment would continue but it expects that the investment bank performance in 2010 as a whole would improve, in part because its lower risk profile should have less impact on its results.
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