UBS ( UBS) on Monday said it would write down an additional $10 billion worth of collateralized debt obligations exposed to U.S. subprime mortgages. The Zurich-based investment bank also said it would receive a cash infusion of $11.5 billion from two big investors, according to a press release. The government of Singapore is injecting roughly $9.7 billion, giving it roughly a 9% stake in UBS, while an unnamed investor in the Middle East is purchasing $1.7 billion. Earlier this year UBS had to shut down its alternative asset-management firm Dillon Read Capital due to subprime losses. In October it took a $3.4 billion writedown based on the declining values of its collateralized debt obligations, or CDOs. The company said that it expects to record a net loss for the fourth quarter and that "it was now possible" that UBS would record a net loss, attributable to shareholders, for 2007. "In response to continued deterioration in the U.S. subprime mortgage securities market, partly driven by increased homeowner delinquencies but mainly fueled by worsening market expectations of future developments, UBS has revised the assumptions and inputs used to value U.S. subprime mortgage-related positions," the company said in a release. The writedowns were on CDOs and "super senior" holdings, UBS said. "Conditions in the U.S. mortgage and housing markets have continued to deteriorate and we have updated our loss assumptions to the levels implied by the current distressed market for mortgage securities," said UBS group CEO Marcel Rohner, in a statement.
"In the last several months, continued speculation about the ultimate value of our subprime holdings -- which remains unknowable -- has been distracting. In our judgment, these writedowns will create maximum clarity on this issue and will have the effect of substantially eliminating speculation," he continued. "Together with the strengthening of our capital base this will allow us to concentrate on sustaining and developing our client businesses." UBS' colossal writedown comes as securities firms including Merrill Lynch ( MER) and Citigroup ( C) struggle to regain footing as the credit crunch and housing downturn takes a toll on their securities businesses. Both firms, which took billions of losses from CDO writedowns in the third quarter, ousted their CEOs as a result. Merrill Lynch has since hired former NYSE Euronext ( NYX) CEO John Thain to head up the brokerage firm. Citi is reportedly close to hiring a new CEO. The financial giant's board is expected to pick a new CEO at a board meeting scheduled for Monday and Tuesday, according to The Wall Street Journal. Citi also recently benefitted from a large foreign investment as it battles the recent credit environment. The Abu Dhabi Investment Authority last month invested $7.5 billion in the firm. Shares of UBS most recently rose 96 cents, or 2%, to $51.44 in trading on the New York Stock Exchange.