UBS In Deeper Sub-Prime Waters

by Stewart Douglas

Story link: UBS In Deeper Sub-Prime Waters

Swiss investment bank UBS has today unveiled further sub-prime woes following reports released today that show a loss over the last financial year at the bank further to substantial writedowns against its exposure to sub-prime linked assets, capping what has been a disastrous year for the group.

The bank today reported that it had realised a loss over 2007 after significant declines in the value of its assets since the sub-prime collapse.  Its end of year accounts reflected a loss of 4.4 billion Swiss Francs, or $4 billion.  Compared with the net profit reported over 2006 of 12.2 billion Francs, the results reflect a significant downturn in the fortunes of the bank.

Along with the results of today, the bank announced even more writedowns against its sub-prime assets, reflecting a total loss of some $18.4 billion in writedowns, which has done little to breed confidence amongst industry experts, investors and shareholders.

This marks the first loss at UBS since its creation in 1998 following the merger of Swiss Bank and Union Bank of Switzerland, and has prompted the bank to cut back much of its staff and investment divisions, along with the cessation of its private banking division in a bid to rebuild its reputation and drive revenues.

Whilst the news of today has been highly damning, the worst is yet to come at UBS with the full financial picture set to be released early in February, which analysts have projected could result in even further financial problems at the bank.

It remains to be seen whether UBS can recover over the course of 2008 amidst the ongoing market difficulties and weak investor confidence throughout the investment banking market.