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Swiss bank exposes holes in Q3 results


Swiss bank exposes holes in Q3 results


Even the indestructible Swiss banking giants are not immune from America’s subprime woes it seems, with today’s news from Europe’s biggest bank UBS it will slash 1500 jobs and take a third quarter loss.

Boss Marcel Rohner also has to face the flak after deciding to write down nearly two and a half billion euros of fixed income securities.

The dramatic turnaround in UBS’s fortunes has taken just three months. The second quarter added nearly four billion euros to its year’s profits, but it has bled red ink since, and could lose between 361 to 485 million euros in the third quarter.

“Last year we could already see signs of the trouble ahead, and we knew difficulties were coming. We took steps to insure ourselves against these problems, but what has happened during the third quarter was unimaginable, and beyond our wildest projections”, said Rohner.

The worst is yet to come, as millions of US homeowners are facing payment rescheduling in the coming months as early cheap rate mortgages are readjusted according to market rates. This could push many into failing to meet their monthly payments, and crash the fragile housing market.

UBS also warns there may be more bad news in the pipeline, especially from its investment banking arm, whose boss Huw Jenkins has resigned. UBS and Credit Suisse shares fell on the news, prompting some investors to suggest now might be a good time to buy while banks are relatively cheap. Brave souls, indeed.

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