Friday July 4, 2008
UBS may add to writedowns
It may also seek to raise more capital
SYDNEY: UBS AG may post US$6.9bil of additional writedowns and seek to raise more capital, Citigroup Inc said, a day after chairman Peter Kurer told a newspaper the Swiss bank won’t need more funds.
The Zurich-based company, which wrote down US$38bil over the past three quarters, still carries US$83bil of “risk exposures that are likely to require further markdowns,” London-based Citigroup analyst Jeremy Sigee said in a note yesterday.
Sigee, who rates UBS a “hold” with a “high risk” caveat, estimates the company may post a loss of 4.5bil Swiss francs (US$4.4bil), and announce writedowns of as much as 7bil francs when it reports second-quarter earnings on Aug 12. JPMorgan Chase & Co analysts said on Wednesday UBS may need to mark down its assets by a further 5.1bil francs.
Sigee blamed a slump in financial markets for asset price declines, and said UBS may need to raise more capital, either from asset sales or from shareholders. Kurer, in remarks published by Swiss newspaper Finanz & Wirtschaft yesterday, said the bank won’t need more funds.
Banks and securities firms have turned to investors for US$322bil to replenish reserves after US$403bil of writedowns and credit losses tied to the collapse of the US subprime mortgage market. UBS trails only Citigroup in credit losses and capital raising after turning to investors for US$29.5bil since the credit crisis started a year ago.
The logo of UBS is seen in Lausanne. - AP European banking shares
Kurer, who replaced Marcel Ospel as chairman in April, is leading a strategic review of all of the bank’s businesses to make them better complement the wealth management unit, which he has called the “core franchise.” – Bloomberg
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