UBS bank settles US mortgage suit

Swiss banking giant UBS has unveiled better-than-expected quarterly profits, despite costs associated with settling a probe into mortgage investments.

The exact settlement with the US Federal Housing Finance Agency (FHFA) was not revealed, but UBS reported total costs for “all litigation matters and certain other significant provisions” of SFr865 million (£600m) for the second quarter.

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UBS publishes its full quarterly results next week, but said yesterday that net profits had risen to SFr690m, up from SFr425m a year ago and well ahead of the SFr558m expected by analysts.

The agreement with the FHFA related to the sale of US residential mortgage-backed securities between 2004 and 2007. The FHFA has sued a total of 18 banks over the sale of bonds to government-backed mortgage giants Fannie Mae and Freddie Mac.