Bad debt leads to big loss at UBS

Tuesday, 10 February 2009

UBS, Switzerland's largest bank, has reported a loss of 19.7bn Swiss francs ($16.8bn; £11.3bn) for 2008, due to write-downs at its investment unit.

The bank, which has been hit by bad debts that sparked the credit crunch, said it made a loss of 8.1bn Swiss francs between October and December.

UBS said it remained "cautious" about prospects and would cut a further 2,000 jobs at its investment arm.

The firm got a 6bn-Swiss franc bail-out from the Swiss government in October.

UBS was also told at the time that it could transfer up to $60bn of distressed assets to a fund supported by the Swiss central bank.

'Fragile' conditions

The firm's latest losses were bigger than market expectations, and the loss in the fourth quarter followed a profit of 296m Swiss francs between July and September.

"UBS has had an encouraging start to the year," the company said.

"However, financial market conditions remain fragile as company and household cash flows continue to deteriorate."

UBS, which currently employs about 75,000 people globally, said it was now continuing to focus on its core domestic business.

Banking analyst Dirk Becker of Kepler Capital Markets, said he expected that UBS would still need several more quarters to "clean-up" the mess of its bad debts.

Sources: News.bbc.co.uk