Tax Credit Saves UBS From Large Loss

Swiss banking giant UBS(UBS Quote) announced Friday it likely will break even or report a small loss for the second quarter, thanks to a large tax credit. The company also said it has no need to raise fresh capital.

The bank's investment banking unit has been hit hard by the subprime mortgage meltdown and related credit crisis. Analysts were expecting second-quarter losses of as much as $4.9 billion, the AP noted.

In a news release early Friday, UBS acknowledged the investment banking division was in the red for the quarter, adding that recent market deterioration led to writedowns on previously disclosed positions.

But the damage was offset by a tax credit of roughly 3 billion Swiss francs, or about $2.9 billion. The credit is related to losses the bank has taken to date. UBS also said its Global Wealth Management & Business Banking and Global Asset Management units posted profits. The company will report detailed, final second-quarter results on Aug. 12.

UBS' shares didn't trade in New York Friday, as U.S. markets were closed in observance of the Independence Day holiday. (They finished Thursday's session up 49 cents at $20.32.)

The bank's Zurich-traded stock soared more than 8.0% just after the announcement, but later fell as analysts noted that the bank would have reported a large loss without the tax credit, the AP reported. The Swiss shares ended Friday's session down 2.6% at 20.48 Swiss francs, or about $20.00.