UBS to report $3.4 billion subprime hit
Published October 1st, 2007
Swiss banking giant UBS on Monday said it will take a 4 billion Swiss franc ($3.4 billion) hit in the third quarter from its subprime mortgage exposure and plans sweeping management changes and job cuts at its investment-banking division.
The group estimated that it would report a quarterly net loss — its first in nine years — of 600 million francs to 800 million francs, compared with profit of 2.2 billion francs in the year-earlier period.
UBS, the world’s largest wealth manager, said its fixed-income division will record negative revenue of 4 billion francs due to legacy positions from its now-closed Dillon Read Capital Management hedge-fund unit as well as positions entered as part of its mortgage-backed-securities business.
There have also been losses from equity proprietary trading and the firm’s exposure to leveraged lending.
Chief Executive Marcel Rohner, who was appointed in July after hedge-fund losses led to the departure of his predecessor, said continued market turmoil since the bank’s last update in August led to the loss.
“I have therefore taken decisive action to be as transparent as possible,” Rohner said in a statement.
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