UBS to make modest profit despite $2.3bn trader losses

Oswald Gruebel UBS's former chief executive resigned over the rogue-trading loss.

Swiss bank UBS said it will make a small profit in the third quarter despite losing $2.3bn (£1.5bn) through unauthorised trading.

When it first discovered the alleged fraud, it warned it might report a loss for the three months to the end of September.

But the bank has said in a statement: "UBS expects to report a modest net profit for the group."

Former UBS trader Kweku Adoboli is accused of fraud and false accounting.

The 31-year-old City of London-based trader was remanded in custody until 20 October.

The bank said it now expected a small profit even after taking into account losses from the incident, as well as 400m francs ($435m, £270m) worth of restructuring charges linked to its cost-cutting programme.

But the bank said that its strength buffer - the so-called Tier 1 capital ratio - was expected to be slightly down on the second quarter because of the losses due to the trade.

The former chief executive of Swiss bank UBS Oswald Gruebel resigned over the rogue-trading loss.

The bank is also undergoing a major shake-up which will see it shrink its investment banking division to reduce its risks.

BBC business editor Robert Peston said UBS's profit had been helped by "credit gains on financial liabilities measured at fair value".

He added: "Now these are the kinds of profits that banks should not really like to make - because they imply that conditions in financial markets have become more stressed and that the price of debt issued by banks has been falling."