UBS investment bank suffers in Facebook flop

Tim Wallace
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EARNINGS at UBS dropped sharply in the second quarter, the Swiss institution’s results showed yesterday, with large losses from Facebook’s public launch hitting the investment banking arm hard.

Net profit came in at SFr425m (£277.8m), down 58.1 per cent from SFr1.015bn in the same period of 2011, with profits in the year to date down 55.6 per cent at SFr1.252bn.

The investment banking arm lost SFr130m compared with a SFr383m profit in the same period of last year, in large part due to a SFr349m loss related to Facebook’s initial public offering in May.

UBS was a market maker on the deal, and has accused Nasdaq of “gross mishandling” of the blockbuster float, claiming operational errors by the exchange caused the bank to re-send stock orders multiple times. It plans to seek compensation from the exchange.

Nasdaq would not comment on the specific claims, but earlier this month announced plans to give $62m in compensation to a range of customers who had problems with the IPO.

The investment banking division’s revenues fell 31.8 per cent to SFr1.74bn, while expenses fell 13.6 per cent to SFr1.87bn. Overall, the bank was also hit by weak trading levels in large part due to the Eurozone crisis hitting confidence and reducing market activity.

UBS shed more than 2,000 staff in the year leaving a total of 63,520 while personnel expenses fell 4.4 per cent to SFr3.6bn.

Stocks fell 5.86 per cent in the day to SFr10.29.