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UBS startles market with $14 billion writedown
UBS revealed this morning that it had taken even more damage from the US subprime debacle than it expected, with writedowns totalling $14 billion.
UBS will report its results in full on February 14, but said it would see a net loss of SFr12.5 billion for the quarter and SFr4.4 billion for the full year. In December, the bank warned it could see a loss for the full year.
The reasons for the writedown are still unclear, but rating agency Moody's criticised the bank's collateralised debt obligation (CDO) valuation methods in November. "Given the ongoing deterioration in the performance of the subprime collateral backing the CDOs, we expect the bank will likely need to take further meaningful writedowns on this portfolio. We have noted UBS is marking its super-senior CDOs to model, and this can currently lead to a lower level of markdowns than at banks that are referencing similar securities to the relevant ABX indexes," it wrote.
See also: UBS reports further $10 billion subprime writedowns
Moody's lowers UBS rating due to subprime fears
UBS warns of continuing subprime risk
UBS takes $3.4 billion hit
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