UBS unveils another loss amid reshape

SWISS bank UBS has reported a third quarter loss of SFr564.4m (&pound;337m) after being hit by a hike in accounting charges.<br /><br />The result means the bank has now suffered four successive quarters of losses as it restructures in the face of the credit crunch. UBS, Switzerland&rsquo;s largest bank, has been particularly badly hit by the global financial crisis after heavy investment in the US sub-prime mortgage market.<br /><br />It was forced to pay out &ldquo;substantial accounting charges&rdquo; of&nbsp; SFr2.15bn over the last quarter. <br /><br />The bank also saw a huge outflow of funds, with wealthy customers withdrawing assets amounting to SFr36.7bn in the three months ending 30 September. Stock at the Zurich-based lender dived by 5.1 per cent after yesterday&rsquo;s announcement.<br /><br />Chief executive Oswald Grubel said: &ldquo;We do not expect an immediate recovery in client net new money flows, and the impact of low interest rates continues to hold back revenues.&rdquo;<br /><br />However he added that pre-tax operating profit excluding charges nearly doubled to SFr1.6bn, indicating that the bank was on the road to recovery.<br /><br />Meanwhile operating income rose to SFr5.77bn &ndash; up four per cent on the same period last year. &ldquo;UBS expects to see further progress in restoring the underlying profitability of the business in future quarters&rdquo; said Grubel.<br /><br />The chief executive, who joined in February, has hired former Merrill Lynch executive Robert J McCann to help stop client withdrawals at the wealth management unit. The results came after UBS agreed to provide details of 4,450 accounts to the US.<br /><br />&bull; HSBC yesterday revealed it will cut 1,700 jobs from its UK workforce in an &ldquo;essential streamlining&rdquo; of the business. The cuts will focus on the credit card and collections unit.<br /><br /><strong>ADVISER ROLE FOR LLOYDS AND RBS</strong><br />UBS has taken key roles on two landmark deals to shore up British banks &ndash; landing the Swiss bank a welcome boost in fees and prestige on the same day it shocked the market with worse-than-expected results. UBS is working alongside Bank of America Merrill Lynch to raise &pound;13.5bn for Lloyds in the world's largest rights issue. It is also working with Morgan Stanley to advise RBS on its participation in the Asset Protection Scheme (APS).<br /><br />UBS&rsquo; advisory team is led by Alex Wilmot-Sitwell, co-chief executive of the investment bank, and Chris Fox, a managing director in the bank's London financial institutions group.<br /><br />Lloyds is paying &pound;500m in fees and expenses, of which &pound;190m will go to the six banks underwriting the rights issue &ndash; UBS and Merrill alongside Citi, Goldman Sachs, HSBC and JPMorgan Cazenove. As joint sponsors and global co-ordinators, UBS and Merrill will earn more than the other four, with around &pound;32m each. Another &pound;143.7m will be paid by Lloyds to the UK Treasury to reward it for taking up its entitlement, while &pound;170m will be spent on debt instruments and administrative costs. The banks' fees equate to 2.25 per cent, plus a discretionary fee of 0.2 per cent &ndash; below the 2.75 per cent base fee paid by HSBC when it raised &pound;12.9bn in April. Eton-educated Wilmot-Sitwell is the son of former SG Warburg chairman Peter Wilmot-Sitwell. He was named co-CEO of UBS investment bank in April, making him one of London's most senior bankers. Fox, a Cambridge university graduate, joined UBS in 1993.