UBS may take a $3.5 billion 2007 loss

30 January 2008

Mumbai: Swiss banking giant UBS, hit by $11.4 billion (12.5 billion Swiss francs) fourth-quarter write-downs on the back of the US subprime mortgage crisis, said it would take a $3.5 billion (SFr4.4 billion, 2.75 billion euros) full-year loss for 2007.

It had reported a third quarter loss of $713 million (See: UBS reports a $713 million third quarter loss after subprime write-downs)

In December, UBS AG, Europe's largest investment bank by assets, had signalled fourth-quarter subprime write-downs of $10 billion, stemming from additional losses on its portfolios and weak trading in its fixed income, currencies and commodities division.

The Zurich-based bank raised write-downs directly linked to the subprime mortages to about $12 billion from the $10 billion and said an additional $2 billion of write-downs are likely for other US residential mortgage securities.

UBS attributed the losses to `weak'' debt-trading revenue and the sale of securities at a loss to cut risky assets.

Analysts estimate UBS's total 2007 write-downs on its US mortgage-related securities, including $4 billion of write-downs reported in the third quarter, at $18 billion.