(Corrects currency for German settlement to Swiss francs, from
euros, in headline and first paragraph)
* UBS Q2 net profit 792 mln Sfr vs 690 mln year-ago
* Private bank wins 10.7 bln Sfr in net new money
* Aims to have all German clients come clean by year-end
ZURICH, July 29 UBS booked a 254
million Swiss franc ($280.79 million) charge in the second
quarter mainly to settle claims it helped wealthy Germans to
dodge taxes, the latest in a string of lawsuits that have
targeted its private banking business.
The Zurich-based lender's offices in Germany were searched
last year as part of an investigation of 750 cases involving
foundations, a probe sparked by a CD with details of UBS clients
that was purchased by the German state of North Rhine-Westphalia
UBS, which faces a separate probe in Germany and similar
probes in Belgium and France, said it aims to have all of its
German clients come clean by year-end, from more than 95 percent
"The future outflow of resources in respect of such matters
cannot be determined with certainty based on currently available
information, and accordingly may ultimately prove to be
substantially greater (or may be less) than the provision that
we have recognized," the bank wrote in its second-quarter
The bank on Tuesday reported a quarterly net profit of 792
million Swiss francs from 690 million francs a year earlier,
when results were marred by an $885 million settlement with the
U.S. housing regulator over the mis-selling of mortgage-backed
The result beat expectations in an analyst poll conducted by
Reuters, which averaged 774 million francs.
The settlement comes less than a week after a 15-month
French inquiry into UBS escalated, with the bank put under
formal investigation on allegations it laundered the proceeds of
tax evasion. UBS was also ordered to stump up a 1.1 billion euro
($1.48 billion) guarantee payment, which it called
"unprecedented and unwarranted" and will appeal.
Switzerland effectively ended Swiss banking secrecy in May
by agreeing to join other countries in sharing tax information
once the method of sharing is established as an international
Meanwhile, Swiss banks have spent years attempting to clear
their accounts of undeclared accounts under massive
international crackdowns on tax evaders in Switzerland.
The legal problems overshadow a nearly two-year-old overhaul
to shrink UBS' investment bank, abandoning riskier activities in
its bond trading arm to focus on its more stable private bank.
The ultimate goal of its restructuring drive is bigger
dividends. UBS aims to return at least half of its profits to
shareholders if it can maintain capital - which stands at 13.5
percent under new global rules - at or above current levels
through to the end of 2014 and achieve a ratio of 10 percent
when applying its own stress tests.
Profit at its private bank plunged 43 percent on the cost of
the German settlement, and a key margin on assets also edged
The unit, which is measured by its ability to win fresh
funds from new and existing clients, took in 10.7 billion francs
in net new money.
In its outlook, the bank said global and fiscal tensions as
well as a summer lull would weigh on market conditions, but
The tax probes are only one of UBS' legal worries: it is
among a handful of large banks that global regulators are
investigating over alleged rigging in the $5 trillion-a-day
foreign currency market. In March, UBS said it had widened an
internal probe of forex to include precious metals trading.
In the U.S., authorities are probing UBS for criminal fraud
after a former broker in Puerto Rico allegedly directed clients
to improperly borrow money to buy mutual funds that later
plunged, Reuters reported last month.
The Swiss bank was fined $780 million for helping wealthy
U.S. citizens avoid taxes in 2009.
As of Monday, shares in UBS had fallen by almost 2 percent
so far in 2014, outperforming cross-town rival Credit Suisse
, which was down 6.7 percent on the year, but lagging a
1.1 percent rise in an index of European banks.
Credit Suisse last week posted its biggest loss since the
financial crisis in 2008, the result of a 1.6 billion franc fine
from U.S. authorities for helping its clients evade taxes.
Smaller competitor Julius Baer posted a
higher-than-expected rise in first-half profit.
($1 = 0.9043 Swiss Francs)
($1 = 0.7447 Euros)
(Reporting by Katharina Bart and Joshua Franklin)