Monday, March 31, 2008

"Fools Day" With The Greatest Fool UBS

I have suspended my temporary time out. It took a little longer than initially planned. Due to time constraints my postings in the future will be lighter than before the break. Thanks for all the kind words and mails during the break.

I think it is a good start to kick off the "Fools Day" with news from the the greatest fool UBS. I suggest to read the Q4 details to understand all the drama in the specific positions.

With still close to $ 30 billion ( even if some positions are hedged ) exposure in Subprime and Alt A i expect further write downs and a break up of UBS during the coming 6 to 12 month....

Ich habe meine zwischenzeitliche Auszeit beendet. Sie hat ein wenig länger als ursrünglich geplant gedauert. Aufgrund von Zeitproblemen wird das Posting zukünftig wohl auch weniger häufig ausfallen. Auf diesem Wege möchte ich mich bei allen für die netten Mails und Kommentare bedanken.

Es gibt wohl kaum einen besseren Weg den 1. April mit Neuigkeiten von der UBS zu eröffnen. Bei den nachfolgenden Summen handelt es sich leider um keinen Aprilscherz. Ich empfehle um das ganze Ausmaß des Debakel zu erfassen sich die einzelnen Positionen aus Q4 "reinzuziehen".

Mit immer noch knapp 30 Mrd $ an Subprime und Alt A Positionen ( selbst wenn einiges gehedged sein sollte ) dürfte die nächste Abschreibung schon in Stein gemeißelt sein. Ich tippe weiterhin das die UBS binnen der nächsten 12 Monate aufgepalten wird.


For the first quarter 2008 UBS expects to report a net loss attributable to UBS shareholders of approximately CHF 12 billion after losses and writedowns of approximately USD 19 billion on US real estate and related structured credit positions. In the first quarter, UBS substantially reduced its real estate related positions through both valuation adjustments and significant disposals

Over the first quarter, UBS's exposure to US residential sub-prime mortgage related positions declined to approximately USD 15 billion from USD 27.6 billion on 31 December, and the exposure to Alt-A positions was reduced from USD 26.6 billion to approximately USD 16 billion. These developments are the result of asset disposals as well as the effects of further writedowns. Other risk positions were also reduced. Auction rate certificate positions increased from USD 5.9 billion on 31 December to approximately USD 11 billion


Für das 1. Quartal 2008 erwartet UBS einen den UBS-Aktionären zurechenbaren Reinverlust von ungefähr CHF 12 Milliarden nach Verlusten und Abschreibungen in Höhe von ungefähr USD 19 Milliarden auf Positionen US-Immobilienmarkt und damit zusammenhängenden strukturierten Krediten. Im 1. Quartal reduzierte UBS ihre Positionen im US-Immobilienmarkt in erheblichem Masse. Dies geschah einerseits durch Wertberichtigungen, anderseits durch Veräusserungen.

Im 1. Quartal 2008 hat sich das Engagement von UBS in US Subprime-Hypotheken auf ungefähr USD 15 Milliarden verringert (von USD 27,6 Milliarden am 31. Dezember 2007). Das Engagement in Alt-A-Positionen wurde von USD 26,6 Milliarden auf ungefähr USD 16 Milliarden reduziert. Weitere Risikopositionen konnten ebenfalls verringert werden. Die Positionen in Auction Rate Certificates erhöhten sich von USD 5,9 Milliarden am 31. Dezember 2007 auf ungefähr USD 11 Milliarden

UBS: The writedown and the (analysts') reaction FT Alphaville

The Q1 loss is approximately CHF 12 billion. That includes the CHF 18 billion write-down partly offset by CHF 2 billion of fair value accounting gain on your own debt and CHF 3.8 billion of fair value accounting for the option embedded in the mandatory convertible - or, said another way - the money GIC lost when it bought the UBS mandatory convertible. That last part was unexpected by us, and still seems a bit odd.

UBS’s 1Q08 net profit benefited from a CHF6bn positive accounting gain on revaluation of own debt and the mandatory convertible.

UPDATE: Deutsche Bank sees $3.9 billion mark-downs in Q1

Deutsche Bank said Tuesday that conditions have become significantly more challenging during the last few weeks and it expects first quarter mark-downs of around 2.5 billion euros ($3.9 billion). The mark downs are related to leveraged loans and loan commitments, commercial real estate, and residential mortgage-backed securities (principally Alt-A). Deutsche Bank said that it expects a BIS Tier 1 capital ratio at the end of the first quarter of between 8 and 9%, consistent with the bank's published targets

Compare this with the bragging just a few weeks ago......

Vergleicht das mit der Prahlerei von Ackermann von vor gerade einmal 8 Wochen.....
“In the fourth quarter, we again demonstrated the quality of our risk management. We had no net write-downs related to sub-prime, CDO or RMBS exposures. Those trading businesses in which we reported losses in the third quarter produced a positive result in the fourth quarter. In leveraged finance, where we had significant write-downs in the third quarter, net write-downs in the fourth quarter were less than EUR 50 million.”


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Anonymous Barley said...

Welcome back.

7:32 AM  
Anonymous eh said...

UBS (NYSE: UBS) Raised To Buy at Deutsche Bank.

1:46 PM  
Blogger jmf said...


Wall Street Finest at work......

It seems they have lots of "Fools Days" ... :-)

11:14 PM  
Blogger shtove said...

He's back - hooray!

3:34 PM  
Blogger shtove said...

Fair value accounting?

From my conversations with a trader at UBS in London:
-March 07: Fed interest rate reductions will solve the problem;
-October 07: Sub prime writedowns at the bank are embarassing, but the worst is over;
-December 07: Who cares about inflation when the banking system is at risk? Plus any news of a sale of the investment banking arm will restore the value of my share options; and,
-March 08: The worst is behind us.

Now that's fair value!

3:52 PM  
Anonymous Pancho said...

Got a new name for the bank: OOPS


9:12 AM  
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