UBS in credit crunch probe


UBS in credit crunch probe
Swiss banking authorities are to investigate investment bank UBS' estimated $14 billion (£7 billion) subprime losses.

Representatives of the federal banking commission (EBK) of Switzerland have told newspapers that once the current credit crunch crisis has passed, the body will look into how the losses arose and who was responsible.

EBK spokesman Alain Bichsel told Sonntagszeitung newspaper: "We will investigate how these enormous writedowns could arise and one aspect of that is who was responsible for it."

He added the regulator would also be putting pressure on UBS to overcome the current crisis and increase its capital base.

However, the investment bank is not thought to have breached any EBK rules over risk management or lending limits.

UBS itself has not commented on the reports.

In recent weeks UBS raised funds by selling stakes to investment groups backed by the Singapore and Saudi Arabia governments for over $20 billion (£11 billion).

Losses faces by banks across the world stemmed from US subprime mortgages - sold to those with poor credit backgrounds and low incomes. When large numbers of borrowers started to default the value of investment vehicles backed by the loans plummeted, causing losses around the world.

The resulting losses led to the credit crunch as banks became unwilling to lend to each other as they sought to determine whether where losses laid.

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