UBS suffered a SFr2.5 billion ($2.7 billion) loss last year as the Swiss bank significantly stepped up its programme of shedding risks while beefing up capital reserves to meet stiff new regulatory requirements.
A series of scandals, including the Libor rate rigging affair that cost UBS a $1.5 billion (SFr1.4 billion) fine, forced the bank to announce last October that it would radically cut back its investment banking division, shedding 10,000 jobs in the process.
Fourth quarter results were hit by SFr2.1 in legal costs plus a SFr258 million restructuring charge, resulting in a loss of SFr1.9 billion for the last three months of 2012.
This compared with a SFr393 million profit in the same period of 2011 and full year profit of SFr4.1 billion.
“This experience is a stark reminder of what can happen if we fail to maintain the highest standards in our business,” UBS chief executive Sergio Ermotti said at a press conference.
The bank managed to shed SFr122 billion of risky assets from its books in 2012, mainly from its investment bank.
The bank also announced that it will peg back bonuses further with the introduction of bonds instead of cash for its highest earners. These so-called “bail-in” bonuses can be converted into shares if the bank does well, but could also be wiped out if results dip.
UBS recommended a 50 per cent increase in dividend payments to SFr0.50 for 2012.
Rival bank, Credit Suisse, will announce its results on Thursday.