UBS Swings to Big Loss in Fourth Quarter on $1.5 Billion Libor Fine

UBS posted a steep fourth quarter loss after a $1.5bn libor fine and restructuring costs hammered the bottom line of Switzerland's biggest bank.

UBS reported a net loss of 1.89bn francs (£1.32bn, $2.08bn), or 0.50 francs per share, for the three months ending in December, the bank said in a statement on its website. The figures compare to a net profit of 323m francs, or 0.08 francs per share, over the same period last year Analysts polled by Thompson Reuters were expecting a net loss of 2.078bn francs.

"The bank's performance reflects the effects of the challenging operating environment during the year, the costs involved in reshaping the business and the actions we took to address the challenges we faced," chairman Axel Weber and CEO Sergio Ermotti in the statement. "While progress was made on many issues during 2012, many of the underlying challenges remain at the start of the new."

Net new money inflows under the wealth management division declined to 2.4bn francs from 3.1bn francs in the fourth quarter of 2011, following higher withdrawals by Western European clients amid the crisis in the Eurozone.

In December, the company agreed to pay a fine of $1.5bn in connection with Libor rigging.

"We deeply regret that certain individuals within UBS were involved with the manipulation of LIBOR rates," said the statement said. "Their actions were wholly unacceptable and underline why no amount of profit is worth more than the reputation of the bank. We have taken further action and strengthened our control processes and procedures to ensure our high standards are maintained."

In addition, quarterly personnel expenses rose 15 percent to 4.01bn francs, primarily due to restructuring costs. In October, the company announced plans to cut 10,000 jobs as it focuses on wealth management business and abandons much of the trading business that caused billions in losses in the financial crisis.

Bonuses will also be slashed, the bank said, after reducing its pay-out pool by 7 percent to 2.5 Swiss francs.

The bank noted that it "remains on track" with plans to reduce exposure to risky assets and cut costs. It so far achieved 1.4bn francs in net cost savings since the restructuring started in the middle of 2011.

Despite the quarterly loss, Switzerland's largest bank will pay shareholders 0.15 Swiss francs as dividend for 2012, up 50 percent on the post-crisis dividend of 0.10 francs for 2011.

It also plans to buy back 5bn francs of its debt to reduce its funding costs.

UBS shares rose 0.64 percent in early trading in Zurich to change hands at 15.7 Swiss francs each.