Market to remain difficult: UBS

UBS AG, the European bank with the biggest losses from the global credit crisis, said "difficult" market conditions will further drag on the fees it earns from managing money for wealthy customers.

"Since the beginning of the fourth quarter, we have seen many difficult conditions across equity, credit and money markets worldwide," Zurich-based UBS said in a statement today. "We expect that such conditions will continue to affect our clients' assets, and therefore our fee-earning businesses."

UBS, led by Chief Executive Officer Marcel Rohner, agreed last month to a $59.2 billion aid package from the government and central bank that will split off risky assets. Switzerland's largest bank is seeking to restore investor confidence and halt client redemptions, which amounted to 83.6 billion Swiss francs ($71 billion) at its money-management units in the third quarter. The plan to "firewall toxic assets was an attempt to reassure investors that UBS is a sensible place to park their personal assets," Dirk Hoffmann-Becking, an analyst at Sanford Bernstein & Co, said in a note. "We think restoring confidence to clients could be a slow and arduous process taking place over a period of years." UBS rose 35 centimes, or 1.9 percent, to 19.3 francs by 9:31 am in Swiss trading, trimming this year's decline to 59 percent. Smaller rival Credit Suisse Group AG declined 37 percent over the same period. The Zurich-based bank reiterated yesterday that net income totaled 296 million francs in the third quarter, buoyed by 2.2 billion francs of gains on its own debt and a tax credit. In the fourth quarter, a reversal of gains on its debt may hurt results, UBS said. UBS plans to transfer as much as $60 billion of debt assets to a fund backed by the Swiss National Bank, leaving it with "essentially zero" risk related to US subprime, Alt-A, prime, commercial real estate and mortgage-backed securities, as well as student loan-backed securities and reference-linked notes, Rohner said last month.