New subprime woes for UBS


New subprime woes for UBS
Swiss investment bank UBS has reported further write-downs as a result of its exposure to bad debts in the US subprime mortgage market.

Europe's largest bank by assets revealed the new write-downs totalled $10 billion (£4.9 billion) and warned it was now facing the possibility of reporting an overall loss for 2007.

UBS, which has been badly hit by the crisis in America's subprime market, had already warned in October that its exposure to the sector's problems was likely to cost its business four billion Swiss francs (£1.8 billion).

Reversing previous guidance, the bank stressed it expected to report a fourth-quarter loss in the wake of worsening conditions within the US property market.

In addition, UBS revealed it had secured a major injection of fresh capital from a body connected to the government of Singapore and an unnamed Middle East investor.

The Government of Singapore Investment Corporation has provided UBS with 11 billion Swiss francs (£4.8 billion), while the bank said the unidentified investor – rumoured to be the Oman government - had given a further two billion Swiss francs (£0.9 billion).

Commenting on the developments, UBS chief executive Marcel Rohner said: "Conditions in the US mortgage and housing markets have continued to deteriorate, and we have updated our loss assumptions to the levels implied by the current distressed market for mortgage securities."

Mr Rohner added continued speculation in recent months over the ultimate value of UBS's subprime holdings had been "distracting" and expressed hopes the write-downs confirmed by the company would end such rumours and provide "maximum clarity" on the issue.

"Together with the strengthening of our capital base this will allow us to concentrate on sustaining and developing our client businesses," the UBS boss stressed.

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