UBS posts seventh quarterly loss in two years

Hard-hit Swiss bank UBS AG reported another quarterly loss today while France's BNP Paribas posted a 6.6 percent increase in net profit. The divergence continued this earning season's trend that has seen a number of big banks produce stronger results while others are still struggling from the fallout of the financial crisis. A number of big banks have announced bigger profits for the quarter, including Deutsche Bank AG, Credit Suisse Group, Wells Fargo & Co., Bank of America, Goldman Sachs Group Inc. and JPMorgan Chase & Co. But Morgan Stanley joined UBS in reporting a loss, and others like Citigroup Inc. and HSBC Holdings PLC, were in the black but still weighed down by problem loans. UBS, beset by a U.S. tax evasion probe, posted a second-quarter loss of 1.4 billion Swiss francs ($1.3 billion) in an improvement over the first three months of the year. BNP Paribas' net profit was euro1.6 billion ($2.3 billion) in the three months ended June 30, up from euro1.5 billion a year earlier. Chief Executive Baudoin Prot said the bank "is well positioned to take on the challenges of the current economic environment." The Italian bank UniCredit SpA said its net profit for the quarter fell 74 percent to euro490 million ($705 million), because of lower fees and commissions. In Britain, Standard Chartered PLC said is first-half profit rose 5.5 percent to $1.88 billion even as provisions for bad loans more than doubled to more than a billion dollars. But nationalized bank Northern Rock saw its first half loss rise 31 percent to 740 million pounds ($1.25 billion) as bad loan provisions swelled to over a billion pounds. Lloyds and France's Societe Generale are to report Wednesday, and Royal Bank of Scotland will announce its results Friday. UBS, which has been struggling to recover from major losses in the U.S. mortgage crisis, said the result was more than three times the 395-million franc loss for the same period in 2008, when UBS was also saddled with writedowns of $5.1 billion. The bank, however, could see daylight after being caught in the middle of a U.S.-Swiss legal battle over the Internal Revenue Service's search for U.S. tax evaders. The two governments said Friday they reached a settlement in the case in which thousands of wealthy Americans are suspected of hiding billions of dollars with the Swiss banking giant. Swiss media have reported that under the deal, whose details are still being worked out, the bank will escape paying a fine, but will have to hand over the names of 5,000 investors where there is strong evidence of tax evasion. "We look forward to a definitive resolution of the U.S. cross-border matter," said Chief Executive Oswald J. Gruebel and Chairman Kaspar Villiger. They said the announced settlement was "a positive development in a matter that has adversely affected our efforts to regain the trust of our clients and to restore momentum to our businesses." The bank, once the largest wealth manager in the world, said outflows of money rose sharply in the quarter as investors withdrew assets. The net new money outflow in the quarter was 39.4 billion francs ($37 billion), compared with 14.9 billion francs in the first quarter. Gruebel and Villiger said the outflows were mainly in the international business sector, probably because the tax evasion dispute with the U.S. was causing American depositors to withdraw money they had invested with UBS abroad. The bank said that on the bright side, its capital ratios were strong and that it had achieved a "significant reduction in legacy risk positions and associated losses, including lower credit loss expenses." "While our second quarter results were clearly unsatisfactory, they show significant progress towards returning to profitability and restoring client trust," they said in a letter to shareholders. BNP Paribas' revenue rose nearly 33 percent in the quarter to euro10 billion, thanks in part to the acquisition of troubled Belgian lender Fortis Bank. Excluding this acquisition, BNP Paribas revenue rose 20 percent in the quarter. Barclays, another bank in the winners circle, also benefited by picking up a loser in the financial crisis — the North American business of bankrupt U.S. investment bank Lehman Brothers. It reported Monday that first-half net profit rose 10 percent as stronger earnings from its expanded investment banking division outweighed an increase in bad loans. Net profit for the six months ending June 30 was 1.888 billion pounds ($3.16 billion), compared with 1.718 billion pounds in the previous year. Pretax profit from the Barclays Capital investment banking and securities division increased 100 percent to 1.05 billion pounds with a boost from the Lehman Brothers acquisition. Nic Clarke, analyst at Charles Stanley & Co., said the acquisition of Lehman Brothers "so far, looks to be a very good purchase." UBS shares closed down 4.3 percent at 15.31 francs ($14.36) in Zurich. BNP Paribas shares closed up 0.3 percent at euro52.70 ($75.80).