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UBS profit cut by quarter
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August 14, 2001: 2:53 a.m. ET
Swiss bank posts fall in Q2 profit as private capital arm sinks into red
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LONDON (CNN) - UBS, Switzerland's biggest bank, said on Tuesday second-quarter profit fell 26 percent as it racked up a loss in its private equity business.
Net income in the three months to June 30 fell to 1.39 billion Swiss francs ($822 million), or 1.33 francs a share, excluding one-time items, from 2.05 billion francs, or 1.84 francs a share, a year earlier.
Analysts polled by Reuters had expected net profit to drop about 40 percent versus the second quarter of 2000.
Quarterly pretax profit at UBS Warburg, the investment banking unit, plunged to 468 million francs from 1.33 billion. The bank blamed the decline on losses its at UBS Capital, which provides funding and invests in private companies, as had been widely expected.
Private equity businesses typically provide finance for start-ups or buy stakes in promising companies with the aim of selling them on at higher prices or floating them. The value of many of the UBS unit's investments has fallen in line with their counterparts listed on stock markets.
"About half of the decline in adjusted net profit was attributable to the performance of UBS Capital, which recorded a (pretax) loss of 351 million francs," the company said.
UBS Warburg, which advises companies on mergers, acquisitions and stock market flotations, said revenue rose 17 percent to 5.7 billion francs, even as global stock markets declined.
The investment banking unit, which accounts for more than half of UBS's revenue, topped the league table for mergers and acquisition advice in Europe, after advising on German insurer Allianz's bid for Dresdner Bank for about  24 billion ($21.6 billion).
"Although these are tough markets, our core businesses remain in good health," Chief Executive Luqman Arnold said. "During this quarter we gained market share in key areas, and attracted significant new client assets to our wealth management business."
UBS, formed from the merger of Union Bank of Switzerland and Swiss Bank Corp. in 1998, said second-quarter pretax profit at its private banking and corporate clients unit, UBS Switzerland, slipped slightly to 1.25 billion francs from 1.29 billion a year ago.
Pretax profit at UBS Asset Management, which manages money for clients such as big pension funds, slid to 57 million francs from 93 million. Assets under management rose to 2.56 trillion francs from 2.44 trillion at the end of the first quarter. 
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