Tax credit to boost UBS results

UBS has said that it may break even for the three months to the end of June, and will make a small loss at worst.

The Swiss bank, which has been among the worst hit by the credit crunch, had been expected to report a loss of about 5bn Swiss francs ($4.9bn; £2.5bn).

But UBS said a 3bn Swiss franc tax credit "in connection with the losses to date" would offset further losses from its investment banking business.

The results for the second quarter will be released on 12 August.

Rising shares

In addition to the tax credit, UBS said: "The results reflect positive contributions from global wealth management and business banking and from global asset management, offset by a loss in the investment bank".

However, it added: "Further market deterioration led to writedowns and losses on previously disclosed Investment Bank risk positions."

UBS shares opened up 7.5% following the statement, recovering from the record lows earlier in the week.

The Swiss bank's reputation for financial prudence has been damaged recently by the sub-prime crisis which has seen it make writedowns of more than $37bn on assets linked to mortgage debt.

It has sold businesses as well as raising fresh capital twice: once from the Singapore sovereign wealth fund GIC and an unnamed middle eastern investor and once from its existing shareholders.

In its statement, UBS assured investors that it had "no need to raise new equity".

But the bank confirmed that clients had continued to withdraw money from the bank in the past three months.

"This was most pronounced in April but improved in May and June, in particular for global wealth management and business banking," it said.

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