Tax credit to save UBS from another hefty loss

By Sven Egenter

ZURICH (Reuters) - Battered Swiss bank UBS (UBSN.VX) said on Friday it should be saved from another hefty loss in the second quarter by a large tax credit, giving a much-needed boost to its share price.

UBS, which has written $37 billion (18.7 billion pound) off its assets as a result of the credit crisis, said it expected to break even or make a small loss in the second quarter, helped by the 3 billion Swiss franc (1.49 billion pound) tax credit.

"This comes as a surprise as the market expected a further multibillion loss in the region between 2 billion to 7 billion Swiss francs," said Landsbanki Kepler analyst Dirk Becker.

But its investment bank continued to lose money, and further market deterioration led to writedowns and losses on previously disclosed risk positions, in particular in its monoline insurance exposures, UBS said in a statement.

UBS shares, which this week had hit 10-year lows, rose 4.1 percent to 21.88 francs by 8:19 a.m. British time.

The expected second-quarter result compares with a loss of 11.5 billion francs in the first quarter, when UBS also announced fresh writedowns, dumped its chairman and sought more emergency capital.

UBS now expects its Tier 1 capital ratio to be about 11.5 percent at the end of the quarter and reiterated that it has no need to raise new equity.

"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," UBS said.