UBS Takes a $14 Billion Hit

UBS, the largest Swiss bank, said Wednesday that it would write off $14 billion in exposure to the troubled United States housing market and post a net loss for 2007.

The write-offs will result in a record fourth-quarter net loss of approximately 12.5 billion Swiss francs, or $11.4 billion, the bank said in a statement. It also said it expected to report full-year net loss of 4.4 billion francs, or $4 billion, for 2007.

The numbers "include around $12 billion in losses on positions related to the U.S. subprime mortgage market and approximately $2 billion on other positions related to the US residential mortgage market," the bank said.

The bank, formed through a merger of Union Bank of Switzerland and Swiss Bank Corp. in June 1998, had never reported an annual net loss before, said Christoph Meier, a UBS spokesman.

Banks worldwide have announced more than $135 billion in credit losses and write-downs since the turmoil in the U.S. housing market started last year, and some analysts estimate that total write-downs could reach $800 billion.

UBS said it would provide further details on its financial performance on Feb. 14, when it will publish its final full-year and fourth-quarter 2007 results.

The bank also said it had taken efforts to strengthen its capital base in the last quarter and that it would report a Tier 1 capital ratio of 8.8 percent as of Dec. 31.

(Published by Times Online, January 30, 2008)