UBS, the largest Swiss bank, said Wednesday that it would write off $14 billion in losses on the troubled U.S. housing market and post a net loss for 2007. The write-offs will result in a record fourth-quarter net loss of approximately 12.5 billion Swiss francs, or $11.4 billion, the bank said in a preliminary earnings statement. It also said it expected to report a full-year net loss of 4.4 billion francs for 2007 reports the New York Times.
The numbers “include around $12 billion in losses on positions related to the U.S. subprime mortgage market and approximately $2 billion on other positions related to the U.S. residential mortgage market,” the bank said.
UBS said Dec. 10 that it was writing off $10 billion of subprime investments for the fourth quarter, so the numbers Wednesday represented $4 billion more in losses than it had previously disclosed.
“Once again this is a negative surprise,” said Andreas Weese, a banking analyst at UniCredit in Munich. “I had assumed additional losses, but not of this magnitude.”
The bank had already announced a $4.4 billion loss on subprime investments in the third quarter. The figures Wednesday bring its 2007 U.S. residential mortgage-related losses to $18.4 billion.
Mr. Weese said the bank had not provided much detail, but he theorized that the downgrades of “monoline” bond insurers in the United States had weighed on the results.
Because the values of U.S. mortgage securities have continued to deteriorate, there could still be more write-offs to come in the first quarter of 2008, Mr. Weese said.
Read it here: UBS Takes a $14 Billion Write-Off