Published by Global Banking & Finance Review®
Posted on May 16, 2025
5 min readLast updated: January 23, 2026
UBS is in talks to compensate clients for losses on FX derivatives due to Trump tariff volatility, affecting Swiss banking investments.
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."
(Reporting by Stefania Spezzati in London and Oliver Hirt and Ariane Luthi in Zurich; Editing by Tommy Reggiori Wilkes and Nick Zieminski)
The main topic is UBS negotiating compensation for clients who suffered losses on FX derivatives due to volatility from Trump's tariffs.
The losses were caused by currency volatility following Trump's announcement of tariffs, affecting the dollar and Swiss franc.
Several hundred UBS clients, including wealthier retail customers, have been affected by the FX derivative losses.
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