UBS rises after settlement, deal cheaper than expected
Shares in UBS rose Thursday after the bank settled a US tax evasion probe for $780m (€616.3m), a far lower cost than forecast by market watchers.
At 0846 GMT, UBS shares were Sfr0.41 higher, or up 3.4% at Sfr12.62, outperforming the Stoxx Europe 600 bank index, which rose 0.2%, after UBS overnight agreed to a so-called deferred prosecution with the US Department of Justice and Securities and Exchange Commmission, or SEC.
The bank had already moved to shut the US offshore business, which offered financial services from Switzerland to wealthy Americans, as the probe heated up last year.
"The decision by UBS is a landmark and makes sense. I suspect that the bank will use this to move on effectively as they can draw a line on this embarrassing chapter. The positive market reaction acknowledges this," Seb Dovey, managing partner of advisory firm Scorpio Partnership, said in response to emailed questions.
The settlement of $780m is far less than the Sfr1bn (€672m) to Sfr2bn some analysts, including Peter Thorne of independent brokerage Helvea and Vontobel's Teresa Nielsen, had feared. And because the cost of settling has been fully charged to 2008's earnings, reported last week, analysts said the bank can now concentrate on mending itself and stemming massive outflows.
"It is very positive for UBS to have closed off the case now as it will enable them to move forwards again and to start to build up the reputation," Vontobel's Nielsen wrote in a note. She rates UBS at buy and put her CHF20 target under review on the news.
--Write to Katharina Bart, Dow Jones Newswires; +41 43 443 8043; katharina.bart@dowjones.com
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