Tuesday, January 29, 2008

UBS: $14 Billion in Mortgage Write Downs

What a mess. Seems their 8 week old forecast was $ 4 billion too low. Lets hope the $ 12 billion capital injection from Singapour & the Middle East at fire sale prices will be still enough after the next forecast is hitting the tape..... I think the image as a rock solid Swiss banking giant is now gone and it will take a very long time to bring the once almost perfect reputation back. I assume that this debacle will also infect the much more important wealth management division. A break up is more than likely....

Was für ein Debakel. Sieht so aus als wenn die 8 Wochen alte Prognose mal eben um satte 40% oder $ 4 Mrd verfehlt worden ist. Bleibt die vage Hoffnung das die 12 Mrd $ Kapitalspritzen aus Singapur und dem mittleren Osten auch noch nach der nächsten Prognose immer noch ausreichend sind....... Der Ruf als solide schweizer Bankenadresse dürfte auf Jahre hinaus vernichtet worden sein. Ich kann mir kaum vorstellen das dieses Disaster ohne Auswirkungen auf die Vermögensverwaltung ( die mit abstand wichtigste Sparte ) bleiben wird. UBS wird wohl in der jetzigen Form die nächsten Jahre kaum überstehen.

FT Alphaville UBS, Europe’s largest bank by assets, reported a record loss after about $14bn of writedowns on assets infected by subprime mortgages in the US, reports Bloomberg on Wednesday.The fourth-quarter net loss of 12.5bn Swiss francs ($11.4bn) will result in a full-year loss of about CHF4.4bn, the Zurich-based bank said in a statement on Wednesday.
UBS posted its first annual loss since the company was created through a merger a decade ago, and the Q4 loss was bigger than the record declines reported earlier this month by Citigroup and Merrill Lynch. The collapse of the US subprime mortgage market has led to more than $130bn of losses and markdowns at securities firms and banks since June, notes Bloomberg.

UBS reported about $12bn of losses directly linked to the subprime market and an additional $2bn for positions related to the US residential market. The company said its Tier 1 capital ratio, a measure of financial strength, was 8.8 per cent as of December 31, reported Bloomberg.
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Blogger Ben Bittrolff said...

Make sure you're sitting down before you fire these charts up.
Really Scary Fed Charts, Why Bernanke Will Cut Furiously


5:23 AM  
Anonymous shtove said...

UBS traders have been veeery embarrassed by the news over the last six months.

Are they going to sell up the investment bank?

2:51 PM  
Blogger jmf said...

Moin Shtove,

i think the wealth division has any reason to be angry.

The traders / investment bank division has produced all the write downs.

I´ll bet that if another capital infusion is needed ( likely ) they will be forced to announce some kind of split up.

I don´t think they can sell the bank because tin this environment there is only little value in these

I think a spin off is probably a very good possibility.

9:58 PM  
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10:57 PM  

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