A UBS review has found the Swiss
bank failed to appropriately assess the compliance risk of its US
cross-border wealth management business before its investigation by
US authorities.
The 76-page transparency report,
prompted by the recommendations of a Swiss parliamentary committee,
sheds light on the events that led to the bank to make writedowns
of more than CHF50bn ($52.4bn) from the third quarter of 2007 to
the fourth quarter of 2009.
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In the report, UBS drew attention
to the problems in the wealth management business where it was
alleged UBS staff helped American customers to set up offshore
structures, and in some cases accepted false declarations in US
forms to help customers evade tax.
Ongoing wrangles with US
regulators
The problems led to a series of
ongoing wrangles with the US Department of Justice and Securities
and Exchange Commission over the names of 4,450 US client accounts
UBS holds in Switzerland.
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By GlobalDataIn some cases, internal rules and
expectations were not communicated clearly enough and compliance
failures were not promptly detected and corrected, the report
said.
UBS has published the review into
how it nearly collapsed under the weight ofbns of toxic securities
in 2008 in an attempt to draw a line under its chequered past.
This is the largest loss incurred
by any bank in Europe and the third-largest in the world.
No legal action against top
managers
But the bank confirmed it would not
take any legal action against UBS’s former top managers, because
this would “lead to negative international publicity and hamper
UBS’ efforts to restore its good name in the markets it
operates”.
Switzerland’s largest bank
acknowledged that the bank’s growth into investment banking was not
planned in a sufficiently systematic manner.
Also, it found incentives to generate revenues were not weighed
appropriately against risks, and that this happened across business
units, multiplying the bank’s exposure.
