Swiss banking giant UBS yesterday plunged into further losses during the third quarter as clients spooked by tax scrutiny withdrew billions of dollars of funds and assets from the bank.
The bank said in a statement that its net loss for the three months ending September 30 reached 564 million francs (€373 million), largely hit by credit charges.
The flagship of Switzerland's banking industry also failed to stem an outflow of funds.
Customers withdrew assets amounting to 36.7 billion francs over the quarter, bringing the total outflows over the first nine months of the year to 91.1 billion francs.
The outflows were particularly marked in the United States, where the bank agreed in August to disclose details of 4,450 accounts in order to stave off potentially damaging tax fraud charges brought by US authorities.
The bank had admitted in an earlier case to abetting tax cheats in the United States and paid $780 million in fines.
"In relation to US crossborder clients, we only see outflows," UBS chief financial officer John Cryan told journalists.
The bank's Wealth Management Americas unit booked 9.9 billion francs in outflows in the third quarter, up from 5.8 billion francs in the second quarter.
Mr Cryan attributed the outflows to the "tighter scrutiny" from tax authorities as well as to a "reputational issue" that UBS was struggling to overcome.
"We don't see at present a very early return to positive inflows. We're still executing the exit from US cross-border business," said Mr Cryan.
"Generally there is clearly a residual reputational issue we need to face, there is a morale issue among our client advisers, there has been a tighter scrutiny of tax matters, that's not helping value creation. In the economy there is a lower level of wealth creation," he added.
Mr Cryan also said that for domestic Swiss clients, outflows would not stop until the bank shows that it is profitable again.
The Zurich-based bank, one of the biggest losers in the global financial crisis, has been struggling to recover since it plunged deep into loss.
While several other international banks have posted sharp profits for the quarter, UBS's latest result marked its fourth quarterly loss in a row.
Overall, the bank said it expected to "see further progress in restoring the underlying profitability of the business in future quarters, particularly in 2010."
It added that fourth quarter results of its investment bank unit, which has been blamed for dragging the bank down during the crisis, should reflect the "early stage of its recovery".
Bank Helvea analyst Peter Thorne said the results indicated that "the bank is still work in progress".
Observers highlighted the outflows from the bank. Net new money outflows were worse than expected "with a total outflow of 36.7 billion francs versus our expectations of 23 billion francs," said Bank Vontobel analyst Teresa Nielsen.
"In our view this indicates that the brand has been more hit by reputation issues than expected especially in the Americas," she added.
Analysts at Bank Wegelin said that the net new money outflows, and the signs that they would not improve, would "frighten investors away".
"The only constant in terms of net new money are bad signs," it added.
The bank was trading down 7.72 per cent at 16.01 francs at mid-day trade, the worst performer on the Swiss Market Index, which was trading down 2.01 per cent.