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Banking

UBS investment banking hits the bottom

UBS isn’t doing too badly for a bank supposedly in the midst of a terminal crisis.

Full-year profits for UBS came in at a relatively healthy SFr5.5 billion. Almost every global bank has had a tough fourth quarter, but UBS still managed to post a profit of more than $400 million for the period. And that has been achieved despite the Swiss finish of a tier 1 capital ratio of more than 16%.

If you want to understand where the power in UBS resides, the results make it clear. Switzerland may be a small country but it delivers bumper profits, making Lukas Gähwiler, its CEO for all business in Switzerland, one of the key people in the bank.

Pre-tax profits for Q4 in Swiss retail and corporate banking came to SFr412 million. In wealth management, profits for the same period excluding North America were just shy of SFr500 million – and although UBS doesn’t break out the numbers, you can bet that a big proportion of those numbers were made in Switzerland.

UBS’s turnaround across its wealth management division seems to have survived the latest rogue trading scandal. Full-year pre-tax profits were half the total for the group and up 16% on last year. Net new money is on rise.

Make sure you visit euromoney.com on Wednesday to see how UBS has performed in Euromoney’s annual benchmark private banking survey. Will it have regained ground lost to its biggest rival, Credit Suisse?

Reading through the UBS press release for its full year and Q4 numbers reveals something else.

You’ll have to scroll a long way down to find it. In fact, right to the bottom of the release. There, you’ll see the first mention of UBS’s investment bank, which “actively reduced VaR and RWA in turbulent markets; strong performance in credit, macro and emerging markets outweighed by the effect of challenging market conditions on revenues, leading to a pre-tax loss of SFr256 million”.

There’s no doubt where the priorities lie at UBS in 2012.

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