UBS to be investigated by Swiss regulator

by Gill Montia

Story link: UBS to be investigated by Swiss regulator

UBS, the Swiss investment bank and the world’s largest wealth manager, is to be investigated by the Swiss banking regulator.

The Federal Banking Commission (FBC) has concerns about the extent of the bank’s losses in the global credit crisis and according to FBC spokesman Alain Bichsel, it “will investigate how these enormous writedowns” occurred and will be looking at “who was responsible”.

The Commission will also be increasing pressure on the bank to restore its capital base.

Only last week, UBS sold a 9% share of the business to the Government of Singapore Investment Corporation and a second, smaller stake to an unnamed Middle Eastern investor.

Earlier this month UBS reported that it was increasing its writedowns to around $14 billion, up from a previously reported figure of $10 billion.

The extent of the loss makes the bank a major casualty of the global credit squeeze.

UBS has declined to comment on the announcement from the regulator; it is already the subject of an investigation by the US Securities and Exchange Commission, into the mis-selling of sub-prime mortgage debt.

Meanwhile, plans to create a fund to bail out structured investment vehicles (the source of new potential losses by the big global banks) have foundered.

Citigroup, JPMorgan and Bank of America have abandoned plans to set up the multibillion-dollar fund and according to Chris Whalen, of risk management consultancy Institutional Risk Analytics: “The fund was dead from the outset” because the banks failed to secure enough capital to launch it.