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UBS doubles sub-prime writedowns UBS doubles sub-prime writedowns
(about 4 hours later)
Swiss financial giant UBS has reported that its writedowns as a result of the sub-prime crisis have more than doubled to about $37bn (£18.5bn).Swiss financial giant UBS has reported that its writedowns as a result of the sub-prime crisis have more than doubled to about $37bn (£18.5bn).
It has announced $19bn of fresh asset writedowns on top of the $18.4bn it wrote off in 2007. It is the largest loss by any bank since the credit crunch began.
UBS also said that it was seeking to raise 15bn Swiss francs ($15bn; £7.5bn) in capital by issuing new shares. UBS also announced that its chairman and former chief executive Marcel Ospel would not be seeking re-appointment.
The latest developments are damaging to the firm, which is the European bank worst hit by the credit crisis. The bank has announced $19bn of fresh asset writedowns on top of the $18.4bn it wrote off in 2007, as the value of its assets has plummeted.
The announcements came as it said it expected to post a first-quarter net loss of $12.1bn. UBS added that it was seeking to raise 15bn Swiss francs ($15bn; £7.5bn) in capital by issuing new shares.
Today's announcement will alarm both UBS shareholders and the markets Robert PestonBBC Business editor Read Robert's blog Today's announcement will alarm both UBS shareholders and the markets Robert PestonBBC Business editor Read Robert's blog class="" href="/1/hi/business/7096845.stm">Timeline: Sub-prime losses
It also announced that its chairman and former chief executive Marcel Ospel would not be seeking re-appointment. Its losses dwarf those declared by US banks such as Citigroup ($21.1bn) and Merrill Lynch ($22bn).
Widespread damageWidespread damage
The UBS announcements came as it said it expected to post a first-quarter net loss of $12.1bn.
The US sub-prime problems have hit the balance sheets of banks worldwide and have cost several leading bankers their jobs.
Mr Ospel had previously said that he wanted to stay at the company for another year.
MAIN CREDIT CRUNCH LOSSES UBS: $37.4bn Merrill Lynch: $22bnCitigroup: $21.1bnHSBC: $17.2bnMorgan Stanley: $9.4bnDeutsche Bank: $7.1bnBank of America: $5.3bnBear Stearns: $3.2bnJP Morgan Chase: $3.2bnBayernLB $3.2bnBarclays: $2.6bn IKB: $2.6bnRoyal Bank of Scotland: $2.6bnCredit Suisse:$2bnSource: Company reports Timeline: Sub-prime crisis
"I have always stated that I ultimately take responsibility for the bank's situation," he said.
"We have worked very hard and have been able to address the firm's most pressing problems, thereby laying the foundation for the long-term success of the bank."
UBS also unveiled plans to create a new business that would handle US property assets which had become worthless.UBS also unveiled plans to create a new business that would handle US property assets which had become worthless.
It said that it was confident that this would "deal effectively with the firm's real estate exposures and allow the bank to focus on strengthening its core operations".It said that it was confident that this would "deal effectively with the firm's real estate exposures and allow the bank to focus on strengthening its core operations".
The US sub-prime problems have hit the balance sheets of banks worldwide.
UBS management warned that it expected 2008 to be a difficult year for the firm and the industry as a whole.UBS management warned that it expected 2008 to be a difficult year for the firm and the industry as a whole.
In 2007 it reported its first annual loss since UBS was created from the merger of Union Bank of Switzerland and Swiss Bank Corporation in 1998.In 2007 it reported its first annual loss since UBS was created from the merger of Union Bank of Switzerland and Swiss Bank Corporation in 1998.
Sub-prime loans were lent to US homebuyers with low incomes or with patchy credit ratings. Sub-prime loans were lent to US homebuyers with low incomes or with patchy credit ratings. These investments quickly soured as higher interest rates pushed up mortgage payments and triggered a wave of defaults.
These investments quickly soured as higher interest rates pushed up mortgage payments and triggered a wave of defaults.
As well as resulting in the collapse of Bear Stearns, it has also hit other big Western banks, including Wall Street giants Merrill Lynch, Citigroup and JP Morgan Chase, and BNP Paribas, France's biggest bank.As well as resulting in the collapse of Bear Stearns, it has also hit other big Western banks, including Wall Street giants Merrill Lynch, Citigroup and JP Morgan Chase, and BNP Paribas, France's biggest bank.