* 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
* Cooperating with dark pools probe
(Adds reference to dark pools investigation, Deutsche Bank,
By Katharina Bart
ZURICH, July 29 UBS AG booked a near
$300 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
The Zurich-based lender's offices in Germany were searched
last year as part of a probe sparked by a CD with details of UBS
clients that was purchased by the German state of North
UBS, which faces a separate probe in Germany and similar
probes in Belgium and France, took a 254 million Swiss franc
($280.8 million) charge and said it aimed to have all its German
clients come clean by year-end, from more than 95 percent.
Yet the charge is only one of a slew of legal issues with
which the bank is contending. It hiked its provisions against
future litigation to nearly 2 billion francs but warned this
might still not be enough to cover possible fines and charges.
The bank has taken a strategic decision to scale back its
risky investment banking operations in favour of private banking
and asset management, but remains under threat from possible
past market transgressions.
Underscoring that risk, it said in its quarterly results
statement U.S. regulators were probing its off-market share
trading venue or dark pool, an area where Germany's Deutsche
Bank also said it was under scrutiny.
UBS said it was cooperating with inquiries.
Deutsche meanwhile said its renewed focus on investment
banking had paid off as it reported a 16 percent increase in
quarterly pretax income.
UBS reported a rise in quarterly net profit to 792 million
francs from 690 million 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 bonds.
The result beat expectations in an analyst poll conducted by
Reuters, which averaged 774 million francs.
The settlement in the German tax case 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 ordered to stump up a 1.1 billion euro ($1.5
billion) guarantee payment, which it called "unprecedented and
unwarranted" and will appeal.
Switzerland effectively ended its long-cherished banking
secrecy in May by agreeing to join other countries in sharing
tax information, once a standard method of sharing is agreed.
Meanwhile, Swiss banks have spent years attempting to clear
their accounts of undeclared accounts under massive
international crackdowns on tax evaders.
The legal problems have overshadowed a near two-year
overhaul to shrink UBS' investment bank, abandoning riskier
activities in its bond trading arm.
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. 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.
The tax probes are only one of UBS' legal worries. It is
among a handful of large banks 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 rival Credit Suisse,
which was down 6.7 percent on the year. CS 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 clients
($1 = 0.9043 Swiss Francs)
($1 = 0.7447 Euros)
(Additional reporting by Joshua Franklin; Editing by David