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UBS settles US mortgage litigation | UBS settles US mortgage litigation |
(about 1 hour later) | |
UBS has reached an agreement with US housing agencies to settle claims it had mis-sold mortgage investments. | UBS has reached an agreement with US housing agencies to settle claims it had mis-sold mortgage investments. |
The Swiss bank said it had reached an agreement in principle with the Federal Housing Finance Agency (FHFA) over the investments sold between 2004 and 2007. | The Swiss bank said it had reached an agreement in principle with the Federal Housing Finance Agency (FHFA) over the investments sold between 2004 and 2007. |
In its statement, UBS also said it expected its second-quarter net profits for shareholders to total 690m Swiss francs ($734m; £480m). | |
UBS set aside a total of 865m francs in the quarter to cover litigation. | UBS set aside a total of 865m francs in the quarter to cover litigation. |
Of that, 100m francs is related to a deal with the UK authorities to disclose the account details of British tax evaders and hand back unpaid taxes. | Of that, 100m francs is related to a deal with the UK authorities to disclose the account details of British tax evaders and hand back unpaid taxes. |
The bank said that its wealth management business continued to see large inflows - totalling 10.1bn francs during the three-month period, the highest in six years. | The bank said that its wealth management business continued to see large inflows - totalling 10.1bn francs during the three-month period, the highest in six years. |
Its US private banking business received an additional 2.7bn francs of new client money, although 2bn francs was withdrawn by clients from its asset management unit. | |
The influx of money comes despite the entire Swiss banking sector coming under scrutiny from foreign tax authorities and its own regulators. | |
UBS is currently under investigation from French and German authorities over allegations that it enabled tax evasion. | |
UBS's board is refocusing the bank on serving wealthy clients, slimming down its investment banking and trading operations and cutting 10,000 jobs in the process. | UBS's board is refocusing the bank on serving wealthy clients, slimming down its investment banking and trading operations and cutting 10,000 jobs in the process. |
The decision to make the investment bank subservient to its private banking business came after a string of scandals, including heavy losses on US mortgages during the financial crisis, losses incurred by the rogue London trader Kweku Adoboli, and UBS involvement in Libor-rigging. | The decision to make the investment bank subservient to its private banking business came after a string of scandals, including heavy losses on US mortgages during the financial crisis, losses incurred by the rogue London trader Kweku Adoboli, and UBS involvement in Libor-rigging. |
Mis-representation | Mis-representation |
The deal with the FHFA relates to residential mortgage-backed securities sold during the past decade's US property bubble to federal housing agencies. | |
The underlying mortgages behind the investments later went bad, with many borrowers proving unable to repay their loans. | The underlying mortgages behind the investments later went bad, with many borrowers proving unable to repay their loans. |
UBS is one of 18 international financial firms accused by the FHFA of mis-representing the mortgages as being better quality than they really were. | UBS is one of 18 international financial firms accused by the FHFA of mis-representing the mortgages as being better quality than they really were. |
The FHFA is also representing Freddie Mac and Fannie Mae, which had to be rescued by the US government during the 2008 financial crisis. | The FHFA is also representing Freddie Mac and Fannie Mae, which had to be rescued by the US government during the 2008 financial crisis. |
The settlement comes after UBS and 13 other banks failed to have an appeals court intervene in the case, following what the banks claimed were "gravely prejudicial" rulings against them. | The settlement comes after UBS and 13 other banks failed to have an appeals court intervene in the case, following what the banks claimed were "gravely prejudicial" rulings against them. |
The bank's estimated earnings were better than the 550m-575m Swiss francs that analysts had been expecting, and up from 425m francs during the same period a year ago. | The bank's estimated earnings were better than the 550m-575m Swiss francs that analysts had been expecting, and up from 425m francs during the same period a year ago. |
Its share price rose more than 3% in early trading on Monday following the announcement. | |
UBS will announce its official results for the second quarter of the year on 30 July. | UBS will announce its official results for the second quarter of the year on 30 July. |