UBS in Q4 loss of $11.5 bln on subprime woes

January 30, 2008
Singapore Democrats

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Reuters
30 Jan 08
http://www.guardian.co.uk/feedarticle?id=7267165

UBS AG on Wednesday posted a 12.5 billion Swiss franc ($11.45 billion) loss for the last three months of 2007, dragging the Swiss bank deep into the red for the full year as subprime losses took their toll.

The embattled bank had previously said that it might report a loss for the full year 2007, depending on its performance in the fourth quarter.

Now, in surprise announcement, the bank said the fourth-quarter loss will generate a full-year loss of 4.4 billion francs.

UBS is one of the hardest-hit banks worldwide from the credit crisis that has caused over $100 billion in losses, gashed balance sheets and forced some of the proudest institutions like UBS, Citigroup and Merrill Lynch into emergency capital-raising measures.

The group is now struggling to restructure its investment bank and repair its credibility after the staggering losses, which have pushed its shares 40 percent lower over the past year.

The group said it managed to reduced its balance sheet and risk weighted assets during the quarter, which resulted in a loss, and that it will report a BIS Tier 1 ratio of 8.8 percent as of 31 December 2007.

UBS said in a statement the results reflect $12 billion in losses from the U.S. subprime market, plus $2 billion in losses from other U.S. residential mortgages and that weak trading income dragged performance lower as well.

UBS was scheduled to report results on Feb. 14.

UBS had already taken charges of $14.5 billion on its exposures to U.S. subprime mortgages and last month announced a 13 billion Swiss franc capital injection from Singapore and an unidentified Middle East investor.

The Swiss bank’s huge losses, which have prompted calls for it to spin off its investment banking business and concentrate on its highly successful wealth management activities, stem from a disastrous hedge fund venture into subprime mortgages.

(Reporting by Thomas Atkins; Editing by David Cowell)