Banks

Try Jim Cramer's Action Alerts PLUS
CLICK HERE NOW

U.S. Mortgages Drive UBS Losses

05/06/08 - 02:43 PM EDT

Dan Freed

Updated from 12:45 a.m. EDT

UBS UBS, Switzerland's largest bank, on Tuesday reported a first-quarter net loss of 11.5 billion Swiss francs, driven by a $19.5 billion writedown tied to U.S. real estate and structured credit.

The first-quarter loss of 5.59 Swiss francs per share compares to a loss of 12.9 billion Swiss francs, or 6.45 Swiss francs per share, in the fourth quarter and a profit of 3.2 billion Swiss francs, or 1.5 billion Swiss francs, in the first quarter of 2007.

The bank had warned of the losses last month, and the woes of its U.S. investment banking division have been evident for at least a year, leading to the departures of former CEO Peter Wuffli and Chairman Marcel Ospel.

UBS Brandishes the Blade

More surprising were problems in UBS' money management businesses, all of which made less money than in the first quarter of last year. Hardest hit was its global asset management division, which had net outflows of 16.5 billion Swiss francs in the quarter and saw its operating income drop 21% vs. the year-ago quarter.

UBS also announced it will sell about $15 billion in subprime assets to BlackRockBLK, the U.S. money manager, part of an effort to reduce trading inventories in its investment bank.

"While our exposure is still subject to swings in market conditions, we see market demand for these securities returning in certain areas and at the current level of valuations," CEO Marcel Rohner said in a press release.

UBS has been harder hit by the credit crunch than many of its competitors. Its $19.5 billion writedown in the quarter compares to Deutsche Bank'sDB 2.7 billion euro hit, and a writedown of 5.3 billion Swiss francs from Swiss rival Credit SuisseCS.

U.S. firms CitigroupC and Merrill LynchMER also swung to first-quarter losses on huge writedowns last month.

UBS' shares were recently down about 0.5% to $33.78, after trading as low as $33.04 on the day.





Headlines & Perspectives

Banks

Go To Section Home


05/05/08
Countrywide Plummets on Deal, Debt Fears

A Friedman, Billings Ramsay analyst says BofA should "walk away" from the deal, due to the poor quality of Countrywide's loan portfolio.


05/05/08
Countrywide Plunging on BofA Deal Fears

A Friedman, Billings Ramsay analyst says BofA should 'walk away' from the deal, due to Countrywide's poor loan quality.


05/02/08
S&P Cuts Countrywide Debt to Junk

The rating agency is concerned about BofA's commitment to assume the lender's debt obligations after their planned merger.


05/19/08
Cramer on Top Searched Stocks: Yahoo!

Yahoo! is among the most searched stocks on TheStreet.com. Here's what Cramer had to say about the stock recently.


05/17/08
Jim Cramer's Best Blogs

Catch up on his thinking on the hottest topics of the past week.


04/26/08
Coming Week: Make or Break

Investors will have to deal with a Fed meeting and another flood of earnings and economic data.


05/19/08
Top Rocket Stocks: Ensco

Ensco International and Echelon have the potential to move higher in coming days.


04/28/08
Monday's Analysts' Upgrades, Downgrades

See who made what calls.


05/19/08
Telecom Giants See a Savior in Video

The addition of video is helping telecom companies compete against cable and satellite companies.


05/19/08
Contract Expiration Tempers Oil's Rise

The June West Texas Intermediate contract reflects selling pressure ahead of Tuesday's expiration. But stocks in the sector are generally trading higher.


05/19/08
Analysts' Upgrades, Downgrades: Amazon

See who made what calls.


Your Recent Quotes: Quote Up0 | Quote Down0
Dow S&P 500 NASDAQ
Oil*
Gold
10 Yr
0.00%
%
%
%
Data delayed 20 min
Sign up for our FREE newsletters now.

Keep on top of the market and the critical information you need to make more profitable investing decisions.

  • Cramer's Daily Booyah!
  • Before the Bell

Privacy Policy

See All Free Newsletters

Premium Stock Ideas