Key facts
- UBS's average daily value-at-risk (VAR) reached $21 million in the second quarter.
- This VAR figure is a 90.9% increase from the prior quarter.
- The second quarter VAR is the highest level since at least 2014.
- The increase in hedging activity occurred during a period of geopolitical turmoil.
- Geopolitical turmoil impacted equity markets.
UBS reported a substantial increase in its average daily value-at-risk (VAR) for the second quarter, reaching $21 million. This figure represents a 90.9% rise compared to the first quarter and marks the highest VAR level recorded by the bank since at least 2014. The surge in VAR indicates a significant uptick in hedging activities undertaken by UBS. This heightened hedging strategy occurred against the backdrop of considerable geopolitical turmoil that affected global equity markets during the same period. The increase in VAR suggests that UBS perceived a greater level of potential loss in its trading positions and consequently increased its risk management measures. The data points to a more cautious or aggressive stance on managing market volatility and potential downside risks within the bank's operations.