Latest news with #StefaniaSpezzati
Yahoo
16-05-2025
- Business
- Yahoo
UBS in talks with clients over FX derivative losses on Trump volatility, sources say
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. Trump's announcement of tariffs in early April sparked a sharp drop in the dollar and the biggest monthly gain for the safe-haven Swiss franc since 2015. UBS sold clients 'conditional target redemption forwards', a February prospectus of the product seen by Reuters and sources said. These are exotic derivative FX products that allow clients to buy dollars and sell Swiss francs at a more favourable rate than the prevailing market rate, but can cause big losses if the rate moves past certain levels over a set period of time, according to the prospectus. Losses accumulate and can exceed an initial investment. In the disclaimer accompanying the prospectus, UBS said that "the instruments are not suitable for all investors, and trading in these instruments is considered risky and is only suitable for experienced investors". It also added that "these instruments may involve a high degree of risk and be highly volatile in response to fluctuations in interest rates, exchange rates, and other market conditions." SUITABILITY The Swiss Association for the Protection of Investors, a non-profit organization, told Reuters that more than 30 people had come forward including via a platform launched on Thursday to report damages suffered from structured currency derivative products marketed by UBS. Most of the clients who had got in touch were wealthy private individuals with assets of more than 1 million francs, but who lacked the relevant knowledge of the products such as those sold by UBS, the association said. Swiss media including NZZ, SonntagsZeitung and blog Inside Paradeplatz previously reported that several hundred clients were affected by the losses. Target redemption forwards are typically sold to corporate clients and well-heeled and sophisticated investors. In the example of the product that caused more than 50% losses, the investor agreed to buy dollars and sell francs in $300,000 chunks if the market rate moved above or below certain thresholds, according to a prospectus for the investment dated February 10 and seen by Reuters. But below a 'kick-in level' defined in the terms of the investment, the customer is forced to buy dollars at an exchange rate that locks in a loss, the term sheet showed. Asked on an earnings call with journalists at the end of April about clients facing FX losses, CFO Todd Tuckner said that "when there's volatility, there's going to be clients that generate gains from that volatility and clients who generate losses." Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Yahoo
16-05-2025
- Business
- Yahoo
UBS in talks with clients over FX derivative losses on Trump volatility, sources say
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. Trump's announcement of tariffs in early April sparked a sharp drop in the dollar and the biggest monthly gain for the safe-haven Swiss franc since 2015. UBS sold clients 'conditional target redemption forwards', a February prospectus of the product seen by Reuters and sources said. These are exotic derivative FX products that allow clients to buy dollars and sell Swiss francs at a more favourable rate than the prevailing market rate, but can cause big losses if the rate moves past certain levels over a set period of time, according to the prospectus. Losses accumulate and can exceed an initial investment. In the disclaimer accompanying the prospectus, UBS said that "the instruments are not suitable for all investors, and trading in these instruments is considered risky and is only suitable for experienced investors". It also added that "these instruments may involve a high degree of risk and be highly volatile in response to fluctuations in interest rates, exchange rates, and other market conditions." SUITABILITY The Swiss Association for the Protection of Investors, a non-profit organization, told Reuters that more than 30 people had come forward including via a platform launched on Thursday to report damages suffered from structured currency derivative products marketed by UBS. Most of the clients who had got in touch were wealthy private individuals with assets of more than 1 million francs, but who lacked the relevant knowledge of the products such as those sold by UBS, the association said. Swiss media including NZZ, SonntagsZeitung and blog Inside Paradeplatz previously reported that several hundred clients were affected by the losses. Target redemption forwards are typically sold to corporate clients and well-heeled and sophisticated investors. In the example of the product that caused more than 50% losses, the investor agreed to buy dollars and sell francs in $300,000 chunks if the market rate moved above or below certain thresholds, according to a prospectus for the investment dated February 10 and seen by Reuters. But below a 'kick-in level' defined in the terms of the investment, the customer is forced to buy dollars at an exchange rate that locks in a loss, the term sheet showed. Asked on an earnings call with journalists at the end of April about clients facing FX losses, CFO Todd Tuckner said that "when there's volatility, there's going to be clients that generate gains from that volatility and clients who generate losses." Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Yahoo
06-05-2025
- Business
- Yahoo
From rebound to rescue: how Argentex collapsed on untested currency swings
By Charlie Conchie, Stefania Spezzati and Nell Mackenzie LONDON (Reuters) -In early April, Argentex's chief executive Jim Ormonde and chief financial officer Guy Rudolph were buying shares in the London-listed foreign exchange broker as the stock rebounded from a March slump. Ormonde, installed 18 months earlier amid a flagging stock performance, said in an April 2 statement on the company's annual results that Argentex had "reset" in 2024 and was now "well placed to return to profitable growth." In the year to date, its shares had rallied more than 50%. What followed was a dramatic swing in financial markets and a dizzying decline in the company's liquidity position. Within weeks, Argentex would become one of the first high profile corporate victims of market volatility set off by the global trade war. IFX Payments took over Argentex in a rescue deal for just a fraction of what it had been worth, and the CEO and CFO have gone. Argentex declined to comment. UK-based IFX did not respond to requests for comment. April 2 was also "Liberation Day," when U.S. President Donald Trump unveiled sweeping reciprocal tariffs against numerous countries, triggering heightened volatility for trading firms as currency markets moved widely. The safe-haven Swiss franc surged roughly 7% against the U.S. dollar during April, while Deutsche Bank's currencies volatility index, a measure of currency swings, rose as much as 28%, to its highest level in two years. Argentex had navigated previous big market routs such as the fall of sterling against the dollar in 2022, Brexit and the COVID-19 pandemic. But while it had done scenario modelling and stress testing, it hadn't planned for the dollar's rapid devaluation against many major currencies, according to two people familiar with the company. They spoke on condition of anonymity because the information was private. Argentex was most exposed to a sudden strengthening of the pound, Swiss franc and the euro against the greenback, one of the people said. ZERO-ZERO LINES In its 2024 annual report, Argentex said that "regular stress testing is performed to ensure the group has sufficient collateral pledged and other unencumbered resources to cover its current and potential obligations in the event of a significant market movement." Yet when the market moved against it, Argentex was left exposed to cash calls from its liquidity providers and unable to call margin from many of its clients due to its use of zero-zero lines, according to the person.
Yahoo
30-04-2025
- Business
- Yahoo
UBS had 'okay-ish' start to Q2 but uncertainty could impact client activity- CFO says
By Stefania Spezzati and Ariane Luthi LONDON (Reuters) -Swiss bank UBS had an "okay-ish" start to the second quarter due partly to market volatility induced by U.S. tariffs, but if increased uncertainty persists it "will have an impact on our activity levels with our clients," UBS Chief Financial Officer Todd Tuckner told reporters on Wednesday. Investment banks faced heightened market volatility at the beginning of April in response to the U.S. tariffs, which increased opportunities for traders to make profits, but also heightened the risks of losses as a result of wild and unexpected moves in certain products. The Swiss franc, for example, rapidly appreciated against the U.S. dollar, surging roughly 7% in April, and is set for its biggest rise in over a decade. A Swiss media outlet reported earlier this month that some UBS clients had lost money which was invested in currency derivatives products. UBS declined to comment on the report at that time. When asked about the report of the possible currency product losses during a call with reporters on Wednesday after UBS published its results, Tucker said that "when there's volatility, there's going to be clients that generate gains from that volatility and clients to generate losses." "We can't comment on and won't comment on the matter, but, you know, certainly in a volatile market, one can expect there will be swings, one would expect volatility in investment accounts," he added. Sign in to access your portfolio
Yahoo
08-04-2025
- Business
- Yahoo
HSBC Americas head for securities finance leaves amid bank restructuring
By Stefania Spezzati LONDON (Reuters) -HSBC's head of securities financing for the Americas, Gregory Bunn, is leaving after two years in the post as the lender merges the unit into two others, a person with knowledge of the matter told Reuters. The restructuring was announced earlier this year when HSBC told staff that the bank would be winding down some equities businesses, including equity underwriting in Europe and the Americas. The London-based bank was one of a few on Wall Street to separately report the performance of its securities financing business, whose services include prime finance and repo products. The business will be absorbed by equities and fixed-income units after the restructuring, the person added. A spokesperson for HSBC declined to comment. Last year, securities financing recorded a surge of 36% in revenue compared to 2023 as the bank gained new clients in prime finance, according to the latest HSBC annual report. In December last year, the HSBC markets unit was combined into the corporate and institutional banking business. As result of the restructuring, Loic Lebrun, global head of prime finance, will report into Franck Lacour, who leads equities, while head of repo Jean-Michel Meyer will report into Mehmet Mazi, head of global debt markets, the person added. Under CEO Georges Elhedery, who took over last September, it has started a major overhaul and expects $1.8 billion in expenses by the end of next year. Before joining HSBC Bunn, who declined to comment for this article, spent almost two decades with Deutsche Bank, according to his LinkedIn profile. Sign in to access your portfolio
