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UBS ordered to set aside more capital to cover litigation risks
by James Phillipps on Oct 29, 2013 at 08:35
UBS has deferred its earnings targets for a year after the Swiss regulator ordered the bank to set aside 50% more capital to deal with litigation, compliance and other risks.
The bank had been aiming to deliver a 15% return on equity by 2015, but said in a statement that this ‘will now be delayed by at least a year’.
Over the past 12 months the Swiss banking giant regulatory and litigation costs have cost the bank more than CHF2 billion, including a CHF1.4 billion fine for its role in the Libor rigging scandal and a further CHF885 million to settle misselling claims in the US around the sale of mortgage-backed securities.
UBS is also one of the banks being investigated by the Swiss regulator Finma over the possible manipulation of the foreign exchange market.
Despite this, third quarter profit swung back into the black at CHF 577 million, ahead of analyst targets although it warned political and market uncertainty was affecting its private banking business.
Elsewhere, Deutsche Bank reported a 98% drop in pre-tax profits after increasing its litigation and regulatory provisions by €1.2 billion.
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