UBS Announced Losses In Connection With Sub-Prime

by Stewart Douglas

Story link: UBS Announced Losses In Connection With Sub-Prime

Investment bank UBS has today announced its first loss in just under five years over the third quarter of 2007, making it the next high profile casualty of the sub-prime mortgage market collapse, alongside Citigroup, Bear Stearns and Merrill Lynch.

The Switzerland based investment bank was forced to take substantial writedowns over the period to reflect a loss in value in certain of its investments, which saw it overall record a loss of $625 million before tax in the period ended September.

The results follow the bank’s preliminary warnings earlier in the month as to its potential exposure to the sub-prime crisis, which has already claimed the scalps of many high profile executives and put many more under intense scrutiny.

Once the darling of investment managers, over exposure to the sub-prime market set up the catastrophic crash witnessed over the late summer months, which has led to lenders and other firms with investment holdings realising substantial losses as a result.

Whilst Merrill Lynch today announced the departure of its leading man over losses linked to the sub-prime, UBS pre-empted any such move replacing executive Peter Wuffli earlier in the year after falling profits and a single collapsed hege fund.

As a result analysts have suggested that the bank will be unlikely to scrap new executive Marcel Rohner so early into the job, for fear of adding further disruption to the UBS investment business.

Meanwhile the bank has forecast that it should return to profitability over the year end as it looks to build on real momentum aside from the writedowns forced in this period’s figures. However it also urged caution to investors in relation to further devaluation in its investments, which could require even further writedowns in the coming months.