The Swiss bank took a hefty write-down in the third quarter, off the back of a trade finance fraud case.
UBS' domestic activities undercut a powerhouse result elsewhere: Swiss pre-tax profit tumbled to 305 million Swiss francs ($334 million) from 353 million francs year-ago, the Swiss bank said in its quarterly results on Tuesday. This is still slightly better than the trough of 229 million francs UBS sank to in the second quarter.
The fall represents the continued erosion in profits from personal and corporate banking. UBS cited lower credit card fees and fewer foreign exchange transactions, as travel screeched to a halt during the pandemic. It left unsaid the other reason: challenger banks are undercutting major incumbents like UBS on fees and terms.
$59 Mln For Fraud Case
UBS was also forced to take weighty write-downs of 84 million francs in total, the bulk of which – 54 million – stemming from «a case of fraud at a commodity trade finance counterparty,» it said, without specifying.
Several big trade finance cases made headlines this year (Switzerland is a traditional stronghold for commodities financing), which cost major banks billions. This summer, Singaporean commodities and oil trading firm Hin Leong Trading collapsed.
Minimal Engagement
Banks kissed off a total of $3.5 million after it emerged that the company allegedly forged documents in order to sell a shipment of oil that was meant as collateral. A total of 23 banks including Britain's HSBC, France's Crédit Agricole, and a series of Asian banks were hit.
Agritrade International represents another high-profile case of alleged fraud: more than 20 banks lost sank nearly $600 million after the company, also Singapore-based, allegedly forged documents. UBS said its overall remaining exposure to the unnamed counterparty which incurred the third-quarter dent is «minimal».
