UBS posts losses of £2bn
by Gill Montia
Story link: UBS posts losses of £2bn
UBS, Europe’s largest bank, posted a loss of £2 billion in 2007, having written down £7 billion on investments related to US sub-prime mortgages.
Last year was the first in a decade that the Swiss bank made a loss and it is expecting 2008 “to be another difficult year”.
Marcel Rohner, UBS chief executive, commented: “While most of our business continued to be very profitable, the sudden and serious deterioration in the US housing market, in combination with our large exposure in sub-prime mortgage-related securities and derivatives, has driven us into loss for the year.”
In the fourth-quarter of last year UBS reported an additional $26.6 billion of new exposure to so-called Alt-A mortgages.
These mortgages are of higher quality than sub-prime loans but are also considered risky.
The bank has since taken a $2 billion charge on this exposure plus an $871 million writedown on credit protection, which it bought from a bond insurer.
UBS says it will be focusing on cost management during 2008, indicating that job losses are to follow.
It has already announced plans to reduce staff at its investment banking unit by 1,500.
So far, UBS has incurred over $18 billion in losses related to the sub-prime market.
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