UBS posts higher profit despite legal costs

Written by New York Times | Updated: Oct 29 2014, 07:19am hrs
Swiss bank UBS reported on Tuesday that its third-quarter profit increased 32% even as it took a loss of nearly $2 billion for legal charges, reflecting the struggle it and other banks face with litigation and regulatory issues.

The bank reported net profit of 762 million Swiss francs, or $802 million, up from 577 million francs in the same period a year earlier.

UBS and many of its competitors are part of an international probe into possible currency manipulation. The Financial Conduct Authority of Britain, the United States Justice Department and regulators from Switzerland and Hong Kong are looking into the issue.

UBS is one of a few banks expected to take part in a global settlement with the British regulator in the coming weeks concerning the manipulation of forex markets.

The bank said it did not expect the regulatory environment to improve soon, adding to analysts concerns that banks will be dealing with such issues for some time.

To that end, UBS said it had set aside 1.8 billion francs for future litigation and regulatory costs. At this point in time, we believe that the industry continues to operate in an environment where charges associated with litigation, regulatory and similar matters will remain elevated for the foreseeable future, UBS said.

The bank said it expected charges associated with such matters to remain at elevated levels through 2014. UBS recently said that certain authorities had started settlement talks that could lead to material fines.