UBS reports investment-banking loss, client inflows

UBS AG, Switzerland’s biggest bank, reported a surprise third-quarter loss at its investment bank on a slump in trading, while the wealth management unit recorded the first net new client investments since 2008.

UBS fell as much as 5.5 per cent in Swiss trading, the biggest decline in almost a year, after posting a 406 million-franc ($418 million) pretax loss at the securities unit.

Chief Executive Officer Oswald Gruebel, in a statement, blamed “very low levels of client activity” and a charge on the bank’s own debt for the investment-banking loss. Wealthy clients added 1.2 billion francs, the first inflows since before the collapse of Lehman Brothers Holdings.

“The disappointment of the loss at the investment bank overshadows the return to inflows at the wealth management division,” said Simon Maughan, an analyst at MF Global in London. “We were really expecting this to be a turning point for the bank.”

UBS fell 87 centimes, or 4.9 per cent, to 16.77 francs at 10.25 am in Swiss trading. The stock has gained 4.5 per cent this year, while Credit Suisse Group AG, the second-biggest Swiss bank, has declined 21 per cent and Bloomberg’s European banking index has fallen 3.9 per cent.