PREVIEW-Libor scandal overshadows UBS Q2 results

Tue Jul 31, 2012 4:31am IST

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* Q2 earnings expected Tuesday at 0445 GMT

* UBS under scrutiny over its part in Libor scandal

* Analysts expect Q2 net profit of 1.141 bln Swiss francs

By Katharina Bart

ZURICH, July 31 (Reuters) - Swiss bank UBS (UBSN.VX) will be scrutinised on Tuesday for what it says about Libor interest rate manipulation, overshadowing an expected increase in first-quarter profit.

Swiss regulator FINMA said on Monday it is questioning UBS and Credit Suisse (CSGN.VX) in an investigation over possible Libor interest rate rigging.

"We are actively going after information that will enable us to make a judgment on what has happened," a FINMA spokesman told Reuters on Monday.

The two banks are not under formal investigation as Swiss banks are legally obliged to cooperate with FINMA, which regulates the country's banks.

Several European banks which are under investigation for suspected rigging of euro interest rates are cooperating with EU antitrust regulators in the hope of lower fines, two people familiar with the matter said on Monday, a move which puts the lenders at a higher risk of lawsuits. [ID:nL6E8IU92P]

UBS was the first bank to say in March it had been subpoenaed in the probe, and later secured leniency from some justice authorities in return for cooperating with probes into the setting of yen and euroyen Libor.

New details from court documents and sources close to the Libor scandal investigation suggest that groups of traders working at three major European banks, including UBS, were heavily involved in rigging the rates. [ID:nL2E8IS0ID]

Analysts have estimated that the scandal could cost the industry between $20 billion to $40 billion, further damaging a sector that is struggling to work its way through the aftermath of the 2007-2009 financial crisis, economic downturns in Europe and the United States, and increased regulatory demands.

Analysts polled by Reuters expect UBS to post a second-quarter profit of 1.141 billion Swiss francs ($1.16 billion), up from 1.0 billion francs a year ago, helped in part by gains on the bank's own debt.

Banks can record gains if the value of their debt falls, since it becomes theoretically cheaper to repurchase it, and conversely book losses if the value of the debt rises.

UBS is expected to post 5 billion francs in net new private banking money according to the average analyst estimate, a healthy reading which underpins future revenue.

($1=0.9811 Swiss francs)

(Editing by David Cowell)

((Katharina.Bart@thomsonreuters.com)(+41 58 306 7312 Reuters Messaging: katharina.bart.thomsonreuters.com@reuters.net)) Keywords: UBS EARNINGS/

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