Swiss miss | FT Alphaville

Swiss miss

At SFr 20bn ($17bn), UBS’s 2008 loss is the biggest in Swiss corporate history. In fact, the banks results, out today, are awash with dire numbers.

  • UBS lost SFr 8.10bn in the fourth quarter alone, in spite of many analysts thinking the worst was over for the bank.
  • Of particular pertinancy right now: variable compensation (bonuses) at the investment banking arm of the business will be 95 per cent lower than last year.
  • The wealthy, meanwhile, appear to be fleeing rather fast. (Such is the cost of high profile tax probes in the US, we think.) UBS’s wealth and business management divisions saw outflows of SFr 58.2bn in Q4.

The bulk of UBS’s Q4 loss comes from the investment bank…Interestingly, the most significant portion of the investment bank writedowns – Sfr 4.2bn – comes because of a bailout by the Swiss governments “bad bank” fund – which bought $16.4bn of securities from UBS in Q4 at a steep discount to the value at which UBS was holding them. That doesn’t really augur well for the possibility of a bad bank in the US – at least from the banks’ point of view. What’s more, UBS has a further $22.7bn of securities in the pipeline waiting to be sold into the SNB StabFund – implying more big writedowns when the transactions go though.

In addition to all those numbers  there’s a SFr 3.7bn writedown from leveraged finance positions and monoline impairment charges on instruments that haven’t been accepted into the SNB StabFund.

And finally, there’s a $1.2bn impairment charge resulting from the reclassification of assets: $15.8bn worth of mystery assets and $7.9bn of student loan ARS. Tellingly, UBS discloses that if it hadn’t reclassified the assets as hold-to-maturity transactions, it would be looking at booking a $4.2bn trading loss on them.

Related link:
Record Swiss loss of SFr20bn for UBS
– FT