UBS announces losses of £9.3 billion
Investment bank UBS has shocked the City after admitting that losses from the sub-prime mortgage crisis are $18.4 billion (£9.3 billion).
The bank said losses from exposure to the sub-prime mortgage crisis in the US had deepened from the $14.5 billion it announced last month.
UBS was not due to update the market until mid February but said it now expects to make an overall loss of Swfr4.4 billion (£2 billion) in 2007, having suggested earlier last month that it ‘may’ make a loss.
Analyst Georg Kanders at WestLB said this is certainly not good and that commentators had expected less.
The losses follow the news last week that the bank was to close its Switzerland-based private banking services to US clients.
There is pressure for Chairman Marcel Ospel who has overseen the embarrassing decline, to step-down. The bank has experienced severe management upheaval over the last 12 months. Back in July, Peter Wuffli was ousted as chief executive after a boardroom rift and Huw Jenkins, chairman and chief executive of the investment banking arm, was forced out over the sub-prime debacle.
The group is struggling to restructure its investment banking arm under new chief executive Marcel Rohner. The losses have sent its shares plummeting 40% over the last year and have prompted calls for it to spin-off its investment banking business and focus on its highly successful wealth management activities.