UBS Announces More Write-Downs
Still reeling from the assault of the subprime mortgage crisis, UBS has announced plans to write down another $19 billion in its mortgage-related assets, bringing the company’s total sub-prime losses to $37 billion. That is the largest write-down by any bank to date.
As a result of the write downs, UBS will sustain a first-quarter net loss of $12 billion.Â
UBS also is seeking approximately $15 billion in new capital, and plans to create a new unit for its illiquid U.S. real estate assets.
Still, even after the write-downs, UBS owns some $16 billion in Alt-A mortgage paper, as well as another $15 billion in various collateralized debt obligations (CDOs).Â
Like many banks, UBS took a major a hit in the wake of the subprime meltdown. And there may be still more to come. In the weeks ahead, analysts predict that other banks will join UBS in announcing substantial write downs of their own.
Recent comments by Federal Reserve Chairman Ben Bernanke seem to echo those predictions. Appearing before the congressional Joint Economic Committee, Bernanke warned that the future outlook for the economy was uncertain at best, adding that the housing and financial markets remained in a state of distress.Â
Bernanke also said the “Râ€Â word - recession - and that the economy could very well be headed down that path in the first half of the year.
Interesting - I think many of us thought we already were there.Â
Our affiliation of lawyers is actively involved in advising individual and institutional investors in evaluating their legal options when confronted with subprime and other mortgage-related investment losses.Â
