Stefania Spezzati, Oliver Hirt and Ariane Luthi
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By Stefania Spezzati, Oliver Hirt and Ariane Luthi
LONDON/ZURICH (Reuters) -UBS is in talks to compensate some clients for losses after they were sold complex foreign-exchange derivatives that wiped out much of their investments when U.S. President Donald Trump's tariffs sparked wild moves in currencies, sources familiar with the matter said.
Several hundred customers of the Swiss banking giant are affected, the sources said, some of whom have seen a significant hit to their investments. They include clients in Switzerland and their combined losses run into hundreds of millions of francs, one of the sources said.
Among those asking for compensation from UBS for the losses incurred are wealthier retail customers who argue they were sold complex products that they did not understand, the second source said, adding that they were only suitable for sophisticated investors.
In one example, a UBS client has lost more than 50% of an investment made in February into an FX derivative designed to bet on the direction of the dollar versus the Swiss francs, according to a document detailing the performance of the investment dated May 9 and seen by Reuters.
That client, together with three others, have accumulated more than 4 million Swiss francs ($4.7 million) in losses from the derivatives, one of the sources with knowledge of their cases said, speaking on the condition of anonymity because of the sensitivity of the matter.
Reuters could not ascertain the total amount of clients' losses and how much UBS is considering in compensation.
"The extreme volatility in the markets of the last few weeks has impacted certain investments," UBS said in a statement in response to questions.
"The vast majority of our clients hold diversified investment portfolios and have done relatively well in this volatile time. We are analyzing potential unexpected effects with our clients," it added.
While the scale of the client losses reported by sources so far is a small fraction of the $5.9 trillion overseen by UBS, the world's No. 2 wealth manager, it is rare for banks to consider compensation. Banks are required to ensure financial products are suitable for the clients to which they sell them.
Discussions over client losses come at a sensitive time for UBS, with the Swiss bank awaiting a government proposal on how much additional capital it might have to hold to reflect its bigger size following its rescue of Credit Suisse in March 2023.
A spokesperson for Swiss Financial Markets regulator FINMA said it does not comment on its supervisory activities or individual cases and that it closely monitors developments at the supervised institutions, including with partner authorities, without further elaborating.
