The mounting penalties are not only embarrassing for the banks -- they also risk eating up capital that could be used to support lending. The Bank of England warned last month that British banks may have to raise new capital, in part because they had underestimated the cost of past misconduct.
UBS said Wednesday it expected to make a loss in the fourth quarter as a consequence of provisions for litigation and regulatory issues, but predicted pre-tax profit of $2.75-3.3 billion for the year.
Just last week, London-based lender HSBC agreed to pay $1.9 billion in a settlement with U.S. regulators over money laundering, a record for a case involving a bank.
UBS was fined nearly $50 million by British regulators last month after it failed to prevent a rogue trader from running up $2.3 billion in losses last year. In 2009, the bank paid $780 million as part of a deferred prosecution agreement in which it admitted to helping U.S. taxpayers hide money from the IRS.