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UBS, the largest Swiss bank, said on Tuesday that its fourth-quarter profit had slumped 76 percent from a year earlier, as money entering its wealth management unit did not make up for a loss in investment banking.

Quarterly net income fell to 393 million Swiss francs, or $427 million, from 1.7 billion francs in the fourth quarter of 2010, the bank said.

The investment banking unit had a loss of 256 million francs, compared with a profit of 100 million francs in the fourth quarter of 2010. It is the second consecutive quarterly loss in investment banking for UBS, and the bank said the beginning of 2012 was looking equally tough.

“Ongoing concerns surrounding euro zone sovereign debt, the European banking system and U.S. federal budget deficit issues” are likely to weigh on demand for bank services and especially trading volumes at the investment bank in the first quarter, UBS said in its quarterly report.

The bank said it cut its 2011 bonus pool for the investment bank by 60 percent from a year earlier.

UBS, however, said it expected to continue to attract client money to its wealth management operations in the first quarter. Net new money there in the last three months of 2011 rose to 5 billion francs, from 3.4 billion francs in the period a year earlier.

The bank, based in Zurich, also strengthened its capital position by increasing the so-called Basel 2.5 Tier 1 ratio to 16 percent from 13.2 percent.

Sergio P. Ermotti, who has run UBS since September, is pursuing a cost-cutting plan that would reduce investment banking and increase the focus on the more successful wealth management business. UBS created the plan to help it comply with stricter capital requirements for banks by the Swiss government and a drop in demand for investment banking services and products.

Mr. Ermotti said previously that completing the cost-cutting plan should give UBS an advantage over rivals that are facing the same market challenges but have yet to react. He said 2012 would be a year of transition.

UBS was one of the banks hit hardest during the subprime mortgage crisis and has since faced other difficulties. The bank’s private banking operation was at the center of a Justice Department investigation of offshore tax evasion by wealthy Americans. Last September, UBS uncovered a $2.3 billion loss from unauthorized transactions at its London equity unit, and a trader, Kweku M. Adoboli, was arrested and charged with fraud and false accounting. That loss led to the resignation of Mr. Ermotti’s predecessor, Oswald J. Grubel.

For the full year, UBS reported a profit of 4.2 billion francs, down from 7.5 billion francs in 2010.

UBS shares declined 0.7 percent on Tuesday to close at $14.27.

UBS, the largest Swiss bank, said on Tuesday that fourth-quarter profit had slumped 76 percent from the period a year earlier, as new money coming into its wealth management unit failed to make up for a loss in investment banking.

Quarterly net income fell to 393 million Swiss francs ($427 million) from 1.7 billion francs in the fourth quarter of 2010, the company said.

The investment banking unit had a loss of 256 million francs compared with a profit of 100 million francs in the fourth quarter of 2010. It is the second consecutive quarterly loss, and the bank said the beginning of 2012 was looking equally tough.

“Ongoing concerns surrounding euro zone sovereign debt, the European banking system and U.S. federal budget deficit issues” are likely to weigh on demand for the bank’s services and especially trading volumes at the investment bank in the first quarter, UBS said in its quarterly report.

The bank said it cut its 2011 bonus pool for the investment bank by 60 percent from a year earlier.

UBS, however, said it expected to continue to attract client funds to its wealth management operations in the first quarter. Net new money there in the last three months of 2011 rose to 5 billion francs from 3.4 billion francs in the period a year earlier.

The bank, based in Zurich, also strengthened its capital position by increasing the so-called Basel 2.5 Tier 1 ratio to 16 percent from 13.2 percent.

Sergio P. Ermotti, who has run UBS since September, is pursuing a cost-cutting plan that would reduce investment banking and increase the focus on the more successful wealth management business. UBS created the plan to help it comply with stricter capital requirements for banks by the Swiss government and a drop in demand for investment banking services and products.

Mr. Ermotti said previously that completing the cost-cutting plan should give UBS an advantage over rivals that are facing the same market challenges but have yet to react to them. He said 2012 would be a year of transition.
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UBS was one of the banks hit hardest during the subprime mortgage crisis, and has since faced other difficulties. The bank’s private banking operation in the United States was at the center of a legal dispute, and in September UBS uncovered a $2.3 billion loss from unauthorized transactions at its London equity unit, prompting the departure of Mr. Ermotti’s predecessor.

For the full year, UBS reported a profit of 4.2 billion francs, down from 7.5 billion francs in 2010.

This post has been revised to reflect the following correction:

Correction: February 7, 2012

An earlier version of this article misstated the amount of client funds UBS attracted in the first quarter. Net new money rose to 5 billion Swiss francs from 3.4 billion francs. It did not rise to 5 million francs from 3.4 million francs.

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DealBook: UBS Profit Falls 76% on Loss in Investment Banking

23-01-2012 21:56 LIONEL NY's PIX 11 News Commentary Aired: January 23, 2012 Mitt Romney and his offshore banking is really nothing compared to globalist elite banksters.

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Mittens: Mr. Offshore - Video

7 February 2012 12:00 pm | By Tom Selby

Scottish Widows has confirmed plans to re-enter the IFA annuity and protection markets following a strategic review of the provider’s intermediary strategy.

Widows has also decided to exit the offshore bond market as it is no longer “core” to the firm’s investment offering. Following the decision, Clerical Medical International will close to new business from March 30.

Lloyds Banking Group director of insurance Toby Strauss says: “The IFA market is a core channel for us and we will be working closely with IFAs to ensure we not only create a new and enhanced product offering but also deliver these in a way that caters for their needs in what is a rapidly changing market.

“We are committed to providing customers with products that reflect their changing needs and with people living longer and rapid growth in demand for annuities we feel this is the right time to signal our move into this market.

“And with a protection gap in excess of £2trn, there is already a substantial customer need for life assurance in the UK. Our existing expertise in life assurance through other channels means that we can utilise this to develop a compelling protection offering that will be specifically designed for the IFA market.”

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Scot Wids to re-enter IFA annuity market and exit offshore bonds

LONDON, UNITED KINGDOM--(Marketwire -02/07/12)- The four sites being closed all belong to the Bank's Group Operations Division, which carries out back office processing for the Bank, and are:

-- Kingsway, Scunthorpe Mortgage Unit (208.5 FTE) - Mainly compulsory
redundancies
-- Quay House, Dudley (217 FTE) - Relocation of most staff to another site
-- St James' House, Romford (212.3 FTE) - Mainly compulsory redundancies
-- Manors Business Park, Newcastle (135 FTE) - Mainly compulsory
redundancies

The Group Operations Division (which is making 840 FTE staff reductions overall) is also consolidating its activities in fewer sites, reducing these from 27 to 15. It is expected over the coming months to announce yet more redundancies and site closures.

There are also a further 265 FTE job reductions being announced today; most notably a Contact Centre in the West Midlands and 67 FTE roles will be lost in the Insurance Division's Offshore Bonds function on the Isle of Man, which is being closed as the Bank withdraws from this sector.

Jobs Slashed In The UK ... But Retained In India

Despite having so far made the jobs of over 30,000 UK-based staff redundant since Lloyds TSB and HBOS first merged, the Lloyds Banking Group remains wedded to its unethical policy of transferring work to India, where it can recruit workers on inferior contracts and far lower pay than the staff they are replacing in the UK.

It is a simple fact that if the Bank were to abandon its discredited Offshoring Policy it could safeguard many of the existing jobs that are being lost in the UK.

The Bank should accept that it has a responsibility to its existing UK-based workers, the local communities within which it operates and the UK Tax Payer, by returning jobs to the UK.

Union Comments

Steve Tatlow, Assistant General Secretary at LTU, has said:

"This is yet another blow to hardworking, low-paid staff in the UK who have so far suffered over 30,000 job reductions since the creation of the Lloyds Banking Group.".

"We are urging the Bank to recognise that it has a responsibility to its existing UK-based staff, the communities within which it operates and the UK Tax Payer that bailed it out, by returning jobs previously transferred to India back to the UK.".

About Lloyds Trade Union (LTU)

Lloyds Trade Union (LTU) is the largest independent trade union representing staff working in the Lloyds Banking Group, with over 40,000 members. In large parts of the Bank, LTU represents over 90% of all managers and staff.

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Lloyds Banking Group Announces Four Site Closures & Redundancy Of The Jobs Of More Than 1,000 Staff

By Martin de Sa'Pinto and Katharina Bart

ZURICH (Reuters) - Julius Baer (VTX:BAER.VX - News) is prepared to pay a fine to escape an escalating U.S. crackdown on offshore bank accounts after last week's indictment of smaller rival Wegelin raised tension among Swiss private bankers.

"We expect we will probably have to pay a fine, but have the resources to satisfy a solution," Baer Chief Executive Boris Collardi told a news conference as the bank announced 2011 results and a share buyback on Monday.

"We've taken an early, proactive approach with the U.S., taken measures including the U.S. exit in 2009 at our own decision, and have an ongoing constructive dialogue," Collardi said, adding he did not expect the bank to be indicted.

He did not say when a resolution was expected, nor how much Baer might have to pay.

U.S. officials have in recent months been piling pressure on Swiss private banks like Baer whose clients include wealthy Americans with hidden offshore accounts. That culminated in the indictment on Thursday of Wegelin, Switzerland's oldest private bank, which had broken itself up the week before in anticipation in order to protect other parts of the business.

Shares in Julius Baer fell 4.8 percent to 37.05 Swiss francs at 1100 GMT, underperforming a 1.2 percent slide on the European banking sector index (:.SX7P).

Dirk Becker, analyst at Kepler Capital Markets, noted that Baer traded at a significant premium to other banks at 1.7 times book value compared to a sector average of 0.6 times.

"Julius Baer is one of the most defensive in our coverage of European banks, but also not free of problems," he said. "The resolution of the U.S. tax matter could potentially be very expensive."

Larger rival Credit Suisse, which reports 2011 numbers on Thursday, is also caught up in the U.S. investigation. The bank said in November it had taken a 295 million Swiss franc charge against third-quarter earnings in connection with the probe, but noted that the final settlement could exceed that.

Baer financial head Enkelmann said after paying 2011 dividends and buying back shares the bank still has roughly 900 million Swiss francs in excess capital, from which Collardi said any fine would be paid.

SOARING FRANC CRIMPS PROFIT

Baer said 2011 net profit fell 27 percent on the year to 258 million Swiss francs ($280.72 million), hurt by lackluster client trading, restructuring costs and other expenses including a one-off payment to resolve a tax dispute with Germany.

Baer cut its profit margin target and raised its cost income ratio forecast as a soaring Swiss franc kept the bank's mainly franc-based costs high but capped foreign-currency revenues.

"Two-thirds of costs are in Swiss francs, while two-thirds of revenues are in non-Swiss franc currencies," Enkelmann said in a earnings call.

"We can still work on costs, to move out some costs from Switzerland and to better match costs and revenues, but this is not short term and will take some time."

Vontobel analyst Teresa Nielsen said the revised targets suggested that restructuring expenses would come in "higher than previously expected."

In what Nomura analyst Jon Peace called "a show of capital strength," the bank also launched a new share buyback of up to 500 million Swiss francs and announced a special dividend of 0.40 francs per share to its ordinary 0.60 franc dividend, returning a further 200 million francs in total to shareholders.

After losing out to Swiss-Brazilian Bank Safra in an attempt to buy Bank Sarasin (:BSAN.S) late last year, the bank said it continued to hunt for acquisitions in Switzerland as well as in its growth markets.

"The board clearly wants to give priority to the mergers-and-acquisitions market ... The second priority is to return additional capital to shareholders via repurchasing shares," Enkelmann told the news conference.

Clients added 10 billion francs in net new money in 2011, ahead of expectations, balanced by falling investment values and the negative effect of the Swiss franc which kept total assets steady at 170 billion francs. Growth markets like Asia and South America yielded strong inflows, as did Switzerland and Germany.

($1 = 0.9191 Swiss francs)

(Additional reporting by Caroline Copley; Editing by Emma Thomasson, Hans-Juergen Peters and Sophie Walker)

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Julius Baer ready to pay fine to avert U.S. probe