CNN is reporting that Swiss bank UBS is writing down another $10B on losses in the US subprime lending market.
Swiss banking giant UBS AG said Monday it will write off a further $10 billion on losses in the U.S. subprime lending market and will raise capital by selling shares to Singapore and an unnamed investor in the Middle East.
UBS will now record a loss for the fourth quarter and a net loss attributable to shareholders for the full year, the bank said.
Yet again, we see more losses blamed on subprime. What about Alt-A and prime loans gone bad? How long will it be until we start to hear about losses related to the mortgage market in general (and not just blaming it on subprime)?
As recently as the middle of November, UBS had predicted a profit for the fourth quarter despite ongoing speculation about its subprime holdings.
“Conditions in the U.S. mortgage and housing markets have continued to deteriorate, and we have updated our loss assumptions to the levels implied by the current distressed market for mortgage securities,” the company’s chief executive, Marcel Rohner, said in a statement.
Yet another classic example of too much Kool-Aid drinking. How do you go from predicting a profit one day, then a month later you’re writing down $10B in losses? Notice how their losses are assumptions, which are based on market values of these mortgage securities. These securities, like any other asset, are only worth what someone else is willing to pay.
The writedown meant UBS (Charts) posted a net loss of 830 million francs ($712 million) in the period ending Sept. 30, the first quarter in nine years in which it suffered an operating loss.
Yet again, we see another major bank posting a first operating loss in nearly a decade. Can this be the end of all problems with mortgage-backed securities, or is the worst yet to come?
No comments yet.