UBS warns on $1.9B litigation charges

Katy Barnato | @KatyBarnato

<p>We take a 'proactive' stance on litigation: UBS CEO</p> <p>Sergio Ermotti, CEO of UBS, says he is confident the bank has started to address the litigation issues but the timescale for resolution is out of his hands.</p>

UBS has warned of 1.8 billion Swiss francs ($1.9 billion) in litigation charges as it reported forecast-beating third-quarter profits, saying charges were likely to remain elevated for the "foreseeable future".
"We believe that the industry continues to operate in an environment where charges associated with litigation, regulatory and similar matters will remain elevated for the foreseeable future," the Swiss banking giant said on Tuesday in a press release detailing its quarterly results.
The bank is preparing to settle probes into alleged currency-rigging, having been hit by an earlier scandal involving the manipulation of interest rates. Other major banks, including JPMorgan, Citigroup and Barclays are also seeking to settle U.S. and
U.K. investigations into foreign exchange markets.
UBS reported third-quarter net profit of 762 million Swiss francs ($802 million) on Tuesday, narrowly beating expectations. Analysts polled by Reuters had forecast UBS would post a net profit of 737 million Swiss francs.
Read MoreUBS Chairman: Don't give Germany the wrong diagnosis

Speaking to CNBC, UBS CEO Sergio Ermotti said that macroeconomic and geopolitical issues were hurting the business, and that clients were "very concerned".

<p>UBS CEO: Our clients remain very concerned</p> <p>Sergio Ermotti, CEO of UBS, says geopolitical tensions and the spread of Ebola are some of the issues that the lender's clients are worried about in the upcoming quarter.</p>

"Every other week we have a new item coming up," Ermotti said on Tuesday. "We need to see a resolution."
Worries highlighted in UBS's press statement included the mixed outlook for global growth, continuing European and U.S. fiscal and monetary policy issues and increasing geopolitical instability.
"The Ebola issue is just adding to concerns," he told CNBC.

<p>Stress tests 'credible and tough': UBS CEO</p> <p>Sergio Ermotti, CEO of UBS, says the ECB's stress tests were "credible and tough", adding that the banking sector still faces "a lot of headwinds". </p>

The 54-year-old Swiss citizen also commented on the European Central Bank's "stress tests", the results of which were published this Sunday. UBS passed the tests, which were designed to assess whether Europe's financial sector could withstand another financial crisis, but 25 other euro zone banks failed.
"I am sure all people involved will learn from this process," said Ermotti, before adding, "It remains to be seen if this will be the ultimate way to address the issues in Europe."