UBS Projecting More Huge Write-Downs, Recapitalization
UBS announced today that the firm plans to write-down another $19 billion in housing-related credit securities held on its books by the end of the first quarter, bringing the firm's total sub-prime losses to $37 billion thus far. As a result, the firm says it will sustain a $12 billion quarterly loss.
The news precedes the firm’s first-quarter earnings announcement, which will be reported May 6. Because of the devaluations, the firm is also seeking another $15 billion in capital, on top of the $19 billion it has already gotten from outside sources. Unfortunately, UBS may not be out of the woods yet—the release shows that even though the firm reduced its sub-prime exposure by half, it is still holding $15 billion in sub-prime positions as well as $16 billion of so-called “Alt-A” positions. To read the UBS release, click here.
In addition to the write-downs and recapitalization, it was also announced that long-time chairman Marcel Ospel will be stepping down at the end of the first quarter. The board of directors has proposed that UBS general counsel, Peter Kurer, be appointed to the board and replace Ospel.
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