GENEVA (AP) — Shares in Swiss bank UBS skidded lower Tuesday after it warned it may miss its earnings targets due to the potential costs of new legal cases.
The stock fell 7.7 percent to 17.70 Swiss francs in Zurich despite a return to profit in the third quarter, as investors feared the bank may not be past the regulatory problems that had plagued it in recent years.
Switzerland's biggest bank said it had a third-quarter profit of 577 million Swiss francs ($644 million), a turnaround from the $2.1 billion-francs loss it had in the same period a year ago.
But the Zurich-based group said it probably would not be able to achieve its profit goals for 2015 because of Swiss regulatory demands that it hold significantly more capital for risks from litigation.
Swiss financial regulator FINMA's demands this quarter were related to "known and unknown litigation," Chief Executive Sergio P. Ermotti told analysts and reporters.
UBS AG confirmed it was one of several global banks being investigated by authorities in Switzerland, the U.S. and Britain for allegedly manipulating foreign exchange rates. It said it is reviewing its operations in its foreign exchange operations.
"We have taken and will take appropriate action with respect to certain personnel as a result of our review," the bank said in the earnings statement.
It said had third-quarter charges of 586 million francs for litigation, regulatory and other related matters, and sees more regulatory challenges ahead.
The new probe suggests UBS may not be past the legal problems that had plagued it over the past three years.
Last year, it agreed to pay fines for allegedly manipulating, along with other banks, a key market interest rate known as LIBOR.
UBS and 17 other financial firms were also sued by the U.S. government for selling some $196 billion worth of mortgage-backed securities to housing financing agencies Fannie Mae and Freddie Mac.
The two agencies invested heavily in residential mortgage-backed securities, which bundled pools of mortgages into complex investments that collapsed after the real-estate bust and helped fuel the financial crisis in late 2008.
UBS reported a balance of $803 million set aside for settling claims the U.S. brought to recoup losses from the mortgage-backed securities. It remains uncertain how much of that may eventually be paid out or whether more money would be needed.
Beyond legal cases, the bank said business was tough. A decline in operating income was partly offset by a cut to expenses and staff. The number of employees was trimmed to 60,635 from 62,628 a year earlier.
"The operating environment in the third quarter remained challenging," the bank said.
Chief Financial Officer Tom Naratil said the U.S. government's fiscal debate, which shut down the government for the first half of October but averted a default, also impacted some customers.
Copyright 2013 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.
Buffalo Police have arrested 26-year-old Nicholas Finnegan of South Buffalo and charged him with pushing Russ Ross to his death.
Buffalo police homicide detectives are investigating a fatal shooting that occurred early Saturday morning.
Police say there were 32 burglaries, 20 in Albion, five in Medina, four in Oakfield and three in the City of Lockport.
The Niagara County Sheriff's responded to Saunders Settlement Road near Comstock in Cambria Friday night after receiving a tip about a suspected meth lab.
Volunteers at Buffalo’s Salvation Army created holiday cards and gift bags for the seniors at the Golden Age Center.
Call 4 Action looked into claims this week that members of BJ's Wholesale Club were paying too much on sales tax on some deeply discounted items.