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Facebook fiasco hits UBS profit

Facebook fiasco hits UBS profit
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UBS has suffered a surprise slump in profit. The Swiss bank’s second-quarter net profit more than halved to the equivalent of 354 million euros.

UBS said its business is being hurt by the eurozone debt crisis, the weak global economic outlook and uncertainty about the US economy with the potential for steep tax increases and spending cuts.

But top of the list for the big trading loss at its investment bank was the stock market debut of social networking site Facebook.

Chief executive Sergio Ermotti accused the US stock exchange Nasdaq of “gross mishandling” of the Facebook offer, which was plagued by technical problems

He said: “We ended up buying a lot more shares than our clients wanted, because the Nasdaq made ​​a big error. They have recognised and acknowledged that error. Now we will use legal means to be reimbursed for that loss. “

UBS found that it had entered orders for Facebook multiple times because of delays of several hours by Nasdaq in confirming those orders. That cost it the equivalent of 290 million euros.

Nasdaq, which is being sued by UBS, has already offered some compensation.

Facebook’s shares have fallen in value by nearly 40 percent since they first went on sale.