UBS Dismiss Writedown Rumours

by Stewart Douglas

Story link: UBS Dismiss Writedown Rumours

Swiss investment bank UBS has today ferociously dismissed rumours in local press that it was preparing to take a further writedown of 4.5 billion Swiss Francs in early 2008, suggesting that to do so would breach accounting policies and there were at present no indications of any further problems for their investment holdings.

However they also took care to add the proviso that market movements are unpredictable and there may be further writedowns in future depending on why happens between now and then, yet strongly denied rumours that their next writedown could be announced in early January next year.

One of the major points of argument forwarded by UBS in favour of their position is that to hold off news of a writedown would be contrary to accounting principles, which require disclosure immediately upon revelation.

‘If we know of such a writedown, we are bound by our accounting principles to announce it immediately, as we did with the 10 bln usd writedown that we announced last week’ said UBS on the allegations today.

However according to Swiss publication Sonntag, rival investment bank JP Morgan was the source of the rumours suggesting the poised writedowns, further adding that this was with the acquiescence of the board of directors of the investment bank, a rumour that has been totally rubbished by spokesmen from UBS today.

UBS was forced to announce writedowns of $10 billion last week as a result of the loss in its sub-prime investment portfolios, following the collapse of the sector earlier in the summer months.

Further alleged writedowns were also proposed to be relating to exposure to the sub-prime sector.  It remains to be seen whether UBS will take writedowns in the new year as has been suggested by the press, or whether the rumours do lack the foundation as UBS suggested.