In the second quarter, UBS (NYSE:UBS) saw its profit drop 58% to $434.16 million. The main reason was the botched Facebook (NASDAQ:FB) IPO, which generated substantial trading losses. In Tuesday morning trading, UBS stock is down 5%.
Nasdaq (NASDAQ:NDAQ) reserved $62 million in compensation for brokers on the Facebook transaction. Yet UBS is far from satisfied. The firm has lashed out at the exchange for its “multiple operational failures” and will probably take legal action.
Still, the problems at UBS go beyond the Facebook IPO. The investment firm continues to see lower trading activity and slower investment banking business. To deal with this, it’s taking painful actions to cut costs. There will also be an emphasis on wealth management, which tends to be more stable and generates strong fees.