UBS AG posted the biggest ever loss by a bank in the fourth quarter after US$13.7 billion in writedowns on securities infected by US subprime mortgages.
Europe's largest bank by assets had a net loss of 12.5 billion Swiss francs (US$11.3 billion), compared with a profit of SF3.4 billion a year ago, the Zurich-based company said yesterday. UBS reported on Jan. 30 a preliminary loss of about 12.5 billion francs for the period, after increasing writedowns.
Chief executive officer Marcel Rohner, on a conference call with reporters, described the results as "unacceptable" and declined to predict whether the bank would return to profit in the current quarter. Rising US subprime mortgage defaults have led to more than US$145 billion in writedowns and loan losses at the world's biggest financial companies. The G7 estimates the markdowns may swell to US$400 billion, German Finance Minister Peer Steinbrueck said last Saturday.
"The rot is spreading to other residential areas," ABN Amro Holding NV analysts Kinner Lakhani and Omar Fall said in a note to clients last week.
The analysts recommended that investors "avoid" UBS shares and forecast as much as US$10.8 billion in further writedowns at the bank.
UBS shares have slumped 36 percent in Zurich trading in the past six months, making it the sixth-worst performer in the 60-member Bloomberg Europe Banks and Financial Services Index, which lost 23 percent.
UBS' writedowns included US$10.8 billion on subprime residential mortgages, US$2 billion on so-called Alt-A mortgages, which fall between subprime and prime, and US$871 million on credit protection purchased from monoline insurers. The bank recorded losses of about US$500 million on commercial real estate and about US$200 million on loans for leveraged buyouts.
The Swiss bank said yesterday that this year would be "another difficult year."
The wealth management and business banking division raised fourth-quarter profit 12 percent to SF2.5 billion, and asset management earnings increased 19 percent to SF476 million. The investment bank had a loss in the quarter of SF15.5 billion, compared with a profit of SF1.36 billion a year ago.
UBS said on Wednesday it had hired Jerker Johansson to head its investment bank, replacing Huw Jenkins, who left in October after debt writedowns.
The 51-year-old vice chairman for Europe at Morgan Stanley will join UBS on March 17 after 22 years at the second-biggest US securities firm.
Johansson "faces many problems at his new firm, including restoring morale, cutting the problem exposures and convincing staff and clients that the investment bank has a long-term future at UBS," Peter Thorne, a London-based analyst at Helvea, said in a note on Wednesday.
TYPHOON: The storm’s path indicates a high possibility of Krathon making landfall in Pingtung County, depending on when the storm turns north, the CWA said Typhoon Krathon is strengthening and is more likely to make landfall in Taiwan, the Central Weather Administration (CWA) said in a forecast released yesterday afternoon. As of 2pm yesterday, the CWA’s updated sea warning for Krathon showed that the storm was about 430km southeast of Oluanpi (鵝鑾鼻), Taiwan’s southernmost point. It was moving in west-northwest at 9kph, with maximum sustained winds of 119kph and gusts of up to 155kph, CWA data showed. Krathon is expected to move further west before turning north tomorrow, CWA forecaster Wu Wan-hua (伍婉華) said. The CWA’s latest forecast and other countries’ projections of the storm’s path indicate a higher
SLOW-MOVING STORM: The typhoon has started moving north, but at a very slow pace, adding uncertainty to the extent of its impact on the nation Work and classes have been canceled across the nation today because of Typhoon Krathon, with residents in the south advised to brace for winds that could reach force 17 on the Beaufort scale as the Central Weather Administration (CWA) forecast that the storm would make landfall there. Force 17 wind with speeds of 56.1 to 61.2 meters per second, the highest number on the Beaufort scale, rarely occur and could cause serious damage. Krathon could be the second typhoon to land in southwestern Taiwan, following typhoon Elsie in 1996, CWA records showed. As of 8pm yesterday, the typhoon’s center was 180km
TYPHOON DAY: Taitung, Pingtung, Tainan, Chiayi, Hualien and Kaohsiung canceled work and classes today. The storm is to start moving north this afternoon The outer rim of Typhoon Krathon made landfall in Taitung County and the Hengchun Peninsula (恆春半島) at about noon yesterday, the Central Weather Administration (CWA) said, adding that the eye of the storm was expected to hit land tomorrow. The CWA at 2:30pm yesterday issued a land alert for Krathon after issuing a sea alert on Sunday. It also expanded the scope of the sea alert to include waters north of Taiwan Strait, in addition to its south, from the Bashi Channel to the Pratas Islands (Dongsha Islands, 東沙群島). As of 6pm yesterday, the typhoon’s center was 160km south of
The Central Weather Administration (CWA) is set to issue sea and land warnings for Tropical Storm Krathon as projections showed that the tropical storm could strengthen into a typhoon as it approaches Taiwan proper, the CWA said yesterday. The sea warning is scheduled to take effect this morning and the land warning this evening, it said. The storm formed yesterday morning and in the evening reached a point 620 nautical miles (1,148km) southeast of Oluanpi (鵝鑾鼻), Taiwan proper’s southernmost point, moving west-southwest at 4 kph as it strengthened, the CWA said. Its radius measured between 220km and 250km, it added. Krathon is projected
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