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UBS Losses Set New Records

Written By Brian Hicks

Posted February 14, 2008


toxic waste


The “subprime” slime strikes again.  The thing is now it seems silly to keep referring to it solely as some subprime problem. It goes far beyond that now.

That’s because the truth is that what started in sub prime world has fatally infected all grades of credit in one way or another and it’s getting worse-much worse.

So sure we can still call it subprime, if it makes us feel better that some how it was “those” people that started it all.   But the truth is as Tanta, from Calculated Risk, says it is—we are all subprime now.

The latest “victim” we learned today was UBS, the largest Swiss bank. Their exposure to the mortgage mess led to their first ever full-year net loss as they also achieved the dubious honor of having the biggest write-down in banking history.

Here’s the skinny.

From AP by Ernst E. Abegg entitled: Subprimes Push UBS to First Annual Loss

UBS AG on Thursday posted a fourth-quarter net loss of $11.28 billion, and a loss for the entire year, besieged as other banks were by investments in U.S. subprime mortgages.

Still holding $27.59 billion in securities linked to the subprime residential mortgage market, UBS said it expects more problems in 2008.

Shares plunged 6.1 percent to 38.36 francs ($34.75) in Zurich.

Switzerland‘s largest bank posted its first full-year net loss since 1997, when it was created out of two major Swiss lenders.

The fourth-quarter loss of 12.45 billion Swiss francs, in line with the bank’s forecast at the end of January, compared with a net profit of 3.4 billion francs in the same period of 2006.

The net loss for the full year was 4.38 billion francs ($3.97 billion), compared with a profit of 12.26 billion francs in 2006.

“Last year was one of the most difficult in our history,” said Chief Executive Marcel Rohner. “While most of our businesses continued to be very profitable, the sudden and serious deterioration in the U.S. housing market, in combination with our large exposure in subprime mortgage-related securities and derivatives, has driven us into (a) loss for the year.”

The bank added in a statement: “UBS expects 2008 to be another difficult year.”


Hank Paulson was right on one thing at least, the worst really is yet to come.