Aug. 13 (Bloomberg) -- UBS AG, under investigation in a U.S. probe of tax evasion, said it examined complaints by former banker Bradley Birkenfeld about working practices at the bank's cross-border business in 2006.

Chairman Peter Kurer, who was general counsel of the world's largest wealth manager at the time, confirmed in a May 2006 letter to Birkenfeld that an internal investigation of his complaints had been completed, UBS spokesman Serge Steiner said in a telephone interview today. Birkenfeld in June pleaded guilty to helping a billionaire UBS customer evade U.S. taxes.

``Results of the investigation were reviewed and recommendations made in order to improve existing policies and framework in the relevant areas,'' Steiner said, declining to provide the letter or elaborate on the details of Birkenfeld's complaints. ``The respective business was then mandated to implement these recommendations.''

UBS, which said yesterday wealthy clients withdrew more funds last quarter than they added for the first time in almost eight years, is being investigated in the U.S. over whether it helped customers dodge American taxes. Birkenfeld said he and his colleagues engaged in a variety of schemes to help U.S. clients conceal $20 billion in assets and evade tax laws.

UBS fell 1.64 francs, or 7.3 percent, to 20.98 francs in Swiss trading. The company yesterday reported its fourth consecutive quarterly loss, bringing net losses from the U.S. subprime crisis to 25.7 billion francs, the most of any bank.

IRS Request

Lehman Brothers Holdings Inc. analysts Jon Peace and Chintan Joshi lowered their share price target for the bank to 24 francs from 27 francs, citing ``weak trading and net new money flows.'' Deutsche Bank analysts cut their price target 6.1 percent to 31 francs and UniCredit SpA analysts reduced their target to 26 francs from 28 francs.

JPMorgan Chase & Co. analyst Kian Abouhossein estimated that UBS clients will probably remove another 10 billion francs from the wealth management business, excluding in the U.S., in the third quarter.

Switzerland's largest bank said last month it will stop servicing accounts for American clients at units that aren't licensed in the U.S., in response to an Internal Revenue Service summons for customer information as part of the tax probe. The Swiss Finance Ministry is evaluating whether UBS should go along with the IRS's request.

The Financial Times reported the contents of Kurer's letter earlier today, saying it shows that senior executives at the bank knew at that time that UBS may face problems because of inadequate securities registration.

To contact the reporters on this story: Elena Logutenkova in Zurich at elogutenkova@bloomberg.net

Last Updated: August 13, 2008 12:25 EDT