UBS Restates its Annual Report 2008

As a result of ‘accounting errors’ UBS had to restate its annual report for 2008 and resubmitted it on 21.5.2009 to the SEC (Form 20-F/A).

The annual report 2008 was not materially influenced by these restatements, however “related corrections would have been material to first quarter 2009 financial statements,” writes UBS in it’s message to the shareholders.

The list of corrected errors, three of which were above CHF 100 millions is as follows:

The restatement comprises three items in excess of CHF 100 million, as follows:

  • Increased fair value of auction rate securities purchase commitments at 31 December 2008 (charge to net trading income of Wealth Management US of CHF 112 million).
  • Calculation of interest income based on the effective interest rate method for assets reclassified from “held-for-trading” to “loans and receivables” in fourth quarter 2008 (reduction of the interest income of the Investment Bank by CHF 180 million).
  • Realization of a foreign currency translation loss deferred in shareholders’ equity due to the partial disposals of an investment in a consolidated investment fund (reduction of other income of the Corporate Center by CHF 192 million).
  • In addition, a number of misstatements, individually below CHF 65 million, were adjusted and resulted in an increase of net profit attributable to UBS shareholders by CHF 79 million.

The consequences of the corrections are, according to UBS:

For full-year 2008, the total net impact of all restated items was a reduction of net profit and net profit attributable to UBS shareholders of CHF 405 million, and a reduction of equity and equity attributable to UBS shareholders of CHF 269 million. The BIS tier 1 capital decreased by CHF 217 million, the BIS total ratio decreased 0.1% and the BIS tier 1 ratio was not affected by the restatement.
On a quarterly basis, net profits attributable to UBS shareholders were reduced by the following amounts for 2008: CHF 82 million in the first quarter, CHF 37 million in the second quarter, CHF 13 million in the third quarter and CHF 273 million in the fourth quarter.

The results for 2008 thus were just a ‘non material’ tad of CHF 405 Millionen, CHF 269 Millionen, respectively worse than originally communicated.

Would you  trust someone your money, for whom +/- 400 millions are non-material?

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