Switzerland’s largest banking group, UBS AG, announced today that it will post losses in the third quarter as a result of a $2 billion loss from unauthorized trading at its investment bank division.
The bank shares dipped by as much as 9.6 percent in Swiss trading following the announcement, and was down 6.3 percent at 10.24 francs by 07:30 GMT. However, in its statement the bank said that no client positions were affected.
“UBS has discovered a loss due to unauthorized trading by a trader in its investment bank,” UBS said in the statement. “The matter is still being investigated, but UBS’s current estimate of the loss on the trades is in the range of $2 billion.” UBS spokeswoman Tatiana Togni declined to comment beyond the company’s statement.
UBS’s investment bank, which recorded 57.1 billion Swiss francs ($65 billion) in cumulative pre-tax losses in three years through 2009, was last unprofitable in the third quarter of 2010. The investment banking unit had pre-tax earnings of 1.21 billion francs in the first half of 2011, while UBS as a whole banking group had net income of 2.82 billion francs during that period.