Further UBS gloom as experts predict customer exodus

11 August 2008

Wealthy clients at UBS are switching to other banks, as the financial gloom at the firm continues to deepen.

Second quarter withdrawals at the Swiss bank's wealth management business have hit $4.6 billion for the three-month period, a poll of analysts conducted by Bloomberg has claimed.

Huge losses approaching $40 billion racked up by UBS due to the credit crunch, along with the firm facing charges in the US for miss-selling auction rate securities, have been blamed for the weakening client interest.

A separate court case currently ongoing in Florida has also brought allegations of the bank colluding with clients to hide around $20 billion worth of assets, in order to help them avoid income tax.

Lurid reports of diamonds being hidden in toothpaste tubes and smuggled to overseas tax havens have emerged from the trial.

The exodus could have a deep and long-lasting impact on the banking giant's financial future, London-based Schroders asset manager Andrew Lynch warned.

"Within private banking, reputation is something that takes a very long time to build and that you can lose very quickly," he told the news agency.

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