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UBS agrees to settle US mis-selling case UBS agrees to settle US mis-selling case
(2 months later)
UBS has agreed a settlement with a US regulator over claims it mis-sold mortgage-backed securities during the pre-crisis housing bubble.UBS has agreed a settlement with a US regulator over claims it mis-sold mortgage-backed securities during the pre-crisis housing bubble.
The Swiss bank reached agreement with the Federal Housing Finance Agency (FHFA) over investments sold to the government mortgage finance companies Fannie Mae and Freddie Mac. The two institutions were central to the subprime crisis and almost collapsed in 2008.The Swiss bank reached agreement with the Federal Housing Finance Agency (FHFA) over investments sold to the government mortgage finance companies Fannie Mae and Freddie Mac. The two institutions were central to the subprime crisis and almost collapsed in 2008.
UBS said the settlement, relating to securities sold between 2004 and 2007, was "subject to documentation and final approvals by the parties", but added the full cost would be covered by provisions made in the second quarter and previously.UBS said the settlement, relating to securities sold between 2004 and 2007, was "subject to documentation and final approvals by the parties", but added the full cost would be covered by provisions made in the second quarter and previously.
It said pre-tax charges over the period would total 865m Swiss francs (£601m) – covering litigation, other provisions and a Swiss-UK tax agreement.It said pre-tax charges over the period would total 865m Swiss francs (£601m) – covering litigation, other provisions and a Swiss-UK tax agreement.
The FHFA was established in 2008 to oversee Fannie Mae, Freddie Mac, and the Federal Home Loan Banks and to promote a more stable housing and mortgage market. The settlement with UBS relates to one of a group of cases filed by the FHFA.The FHFA was established in 2008 to oversee Fannie Mae, Freddie Mac, and the Federal Home Loan Banks and to promote a more stable housing and mortgage market. The settlement with UBS relates to one of a group of cases filed by the FHFA.
The regulator sued 18 banks in 2011, accusing them of violating securities laws by misleading Fannie and Freddie about $200bn (£130bn) in mortgage-backed securities they purchased. The banks include Barclays, Royal Bank of Scotland, Goldman Sachs and Deutsche Bank.The regulator sued 18 banks in 2011, accusing them of violating securities laws by misleading Fannie and Freddie about $200bn (£130bn) in mortgage-backed securities they purchased. The banks include Barclays, Royal Bank of Scotland, Goldman Sachs and Deutsche Bank.
Despite the charges, UBS said its second-quarter profit rose to 690m francs from 425m francs in the same period a year earlier, beating analysts' expectations.Despite the charges, UBS said its second-quarter profit rose to 690m francs from 425m francs in the same period a year earlier, beating analysts' expectations.
UBS said it would publish a full financial report for the second quarter on 30 July.UBS said it would publish a full financial report for the second quarter on 30 July.
The bank announced last year it would cut 10,000 jobs over three years and focus on serving wealthy clients while scaling down its investment banking business.The bank announced last year it would cut 10,000 jobs over three years and focus on serving wealthy clients while scaling down its investment banking business.
It followed heavy losses on the bank's mortgage book during the financial crisis and its involvement in the Libor-rigging scandal.It followed heavy losses on the bank's mortgage book during the financial crisis and its involvement in the Libor-rigging scandal.
UBS said on Monday it received 10.1bn francs of new money into its wealth management business in the second quarter.UBS said on Monday it received 10.1bn francs of new money into its wealth management business in the second quarter.
Its US private banking arm had net inflows of 2bn francs, while 2bn francs were withdrawn from its global asset management business.Its US private banking arm had net inflows of 2bn francs, while 2bn francs were withdrawn from its global asset management business.
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