UBS posts world's biggest sub-prime loss

30 January 2008

Swiss bank UBS has announced more writedowns, admitting to the largest quarterly amount lost by any bank in the world so far due to the sub-prime crisis.

UBS has written down a total of $18 billion for 2007, after confessing it expected a fourth-quarter loss of $11.5 billion following $14.7 billion of sub-prime writedowns.

Analysts had only forecast that the bank would have to write down $6.9 billion and UBS bosses had predicted taking a $10.5 billion hit.

However, the news only dented UBS shares slightly, dropping 1.7 per cent at the close of trading on Wednesday.

Investors were partly reassured by the fact that UBS plans to raise $17.7 billion in fresh capital and were encouraged by the transparency with which the bank disclosed the news.

"An enlarged loss was not unimaginable and is well absorbable under proposed capital-raising measures," Matthew Clark, an analyst at Keefe, Bruyette & Woods, wrote in a note.

UBS is planning to take out loans from investors in Singapore and the Middle East.

However, analysts warn that UBS's wealth management branch could be affected by its massive news in the first half of 2008.

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