
UBS expects subprime losses of $680 million in third quarter
LOSSES & LAWSUITS
The investment bank has reported it expects third-quarter losses of up to Sfr800 million, mainly due to investments tied to subprime assets.
Marcel Rohner, chief executive of UBS, says: "Our first quarterly loss in nine years is an unsatisfactory result, especially after such a strong first half. I have therefore taken decisive action to be as transparent as possible."
UBS's losses outstripped those of its rivals "because we are overweight in the US subprime market, with much higher volumes in a market that has for many years had low volatility," says Rohner.
Senior departures include chairman Huw Jenkins. Rohner now takes the wheel. Jenkins will serve as an adviser to Rohner, who has only been chief executive since Peter Wuffli left in July. Mark Suter, executive vice-chairman, replaces Clive Standish as CFO and Walter Stuerzinger, group chief risk officer, is the new chief operating officer, corporate centre.
UBS had already closed its hedge fund operation, Dillon Read Capital Management, after Sfr380 million in subprime losses. Its approach to write-downs has been equally ruthless. Rohner says it is comfortable with its "rigorous approach" and, while hoping for better results in Q4, has not ruled out further depreciation. It still holds $19 billion of subprime assets. Some 90% are triple-A rated, and 80% have a weighted average life of less than three years. Rohner welcomes the effect the Fed's 0.5% cut on interest rates might have on the market.
Only users who have a paid subscription or are part of a corporate subscription are able to print or copy content.
To access these options, along with all other subscription benefits, please contact info@risk.net or view our subscription options here: http://subscriptions.risk.net/subscribe
You are currently unable to print this content. Please contact info@risk.net to find out more.
You are currently unable to copy this content. Please contact info@risk.net to find out more.
Copyright Infopro Digital Limited. All rights reserved.
You may share this content using our article tools. Printing this content is for the sole use of the Authorised User (named subscriber), as outlined in our terms and conditions - https://www.infopro-insight.com/terms-conditions/insight-subscriptions/
If you would like to purchase additional rights please email info@risk.net
Copyright Infopro Digital Limited. All rights reserved.
You may share this content using our article tools. Copying this content is for the sole use of the Authorised User (named subscriber), as outlined in our terms and conditions - https://www.infopro-insight.com/terms-conditions/insight-subscriptions/
If you would like to purchase additional rights please email info@risk.net
More on Regulation
US banks race against time as Fed plays climate catch-up
Long-awaited US climate risk exercise puts tough pressure on banks’ data and models
EU banks need ‘billions’ in hedges to pass new NII test
Declines in net interest income can be hedged, but the markets may struggle to handle the demand
CFTC chair gloomy over crypto legislation prospects
FIA Boca 2023: Behnam also asks Congress to grant more powers to regulate third-party tech providers
Missing Basel metric could have revealed SVB risks
US regulators did not implement economic value of equity test that SVB failed badly in 2021
Strict term SOFR trading rules ‘permanent’ says Fed’s Bowman
Official says restrictions on use of term SOFR swaps “should not be expected to change”
Esma still wants more tools to tackle clearing crises
Even after Emir 3 draft, EU regulator would like more powers over both foreign and domestic CCPs
Club rules? How German retail trading venues shut out PTFs
Murky rule books prevent non-bank market-makers from competing for Europe’s growing online customer demand
Regulated UK crypto firms fear authorisation Groundhog Day
Industry wants grandfathering in new Treasury framework to avoid business continuity risk