Switzerland’s biggest bank UBS is set to write down a further US$5 billion in assets amid continuing financial turmoil, Swiss weekly SonntagsZeitung reported on Sunday.
The bank will post the loss in the second half of the year and is likely to inform markets just before its extraordinary general meeting on Oct. 2, the paper said without citing its sources.
Subprime losses will account for US$1 billion of the writedowns, while Alt-A loans — made to borrowers one step up from subprime in credit terms — will yield another US$1 billion in losses.
Investments in monoline insurers — a form of bond insurance — will result in US$2 billion of writedowns and student loans the remaining billion, the paper said.
One of the banks worst hit by the subprime crisis, UBS has written down some US$42.5 billion on its subprime-related assets. For its second quarter, it posted a net loss of 358 million Swiss francs (US$315.8 million), but bank chief Peter Kurer insisted last month it would still return to profitability next year.
“We will be profitable again in 2009,” Kurer told the Swiss Sunday newspaper NZZ am Sonntag.
He said the situation faced by the bank could be compared to the aftermath of a severe storm.
“One must first remove the fallen trees, then tidy up the house and cellar, and in the third phase, bring the shine back to the house,” he said, adding that he believes the bank to be now in the second phase.
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