UBS doubles sub-prime writedowns

UBS had warned that 2008 would be a tough year.

Swiss financial giant UBS has reported that its writedowns as a result of the sub-prime crisis have more than doubled to about $37bn (�18.5bn).

It is the largest writedown by any bank since the credit crunch began.

UBS also announced that its chairman and former chief executive Marcel Ospel would not be seeking re-appointment.

The bank has announced $19bn of fresh asset writedowns on top of the $18.4bn it wrote off in 2007, as the value of its assets has plummeted.

UBS added that it was seeking to raise 15bn Swiss francs ($15bn; �7.5bn) in capital by issuing new shares.

Today's announcement will alarm both UBS shareholders and the markets Robert Peston BBC Business editor Read Robert's blog Swiss worry as bank giants fall Link to UBS shareprice

Its losses dwarf those declared by US banks such as Citigroup ($21.1bn) and Merrill Lynch ($22bn).

Widespread damage

The UBS announcements came as it said it expected to post a first-quarter net loss of $12.1bn.

The firm said that the next chapter of the firm's history would be one of "discipline and determination".

"There will be other chapters which will not be perfect but none will be like the ones we have just written".

The US sub-prime problems have hit the balance sheets of banks worldwide and have cost several leading bankers their jobs.

Mr Ospel had previously said that he wanted to stay at the company for another year.

MAIN CREDIT CRUNCH LOSSES UBS: $37.4bn Merrill Lynch: $22bn Citigroup: $21.1bn HSBC: $17.2bn Morgan Stanley: $9.4bn Deutsche Bank: $7.1bn Bank of America: $5.3bn Bear Stearns: $3.2bn JP Morgan Chase: $3.2bn BayernLB $3.2bn Barclays: $2.6bn IKB: $2.6bn Royal Bank of Scotland: $2.6bn Credit Suisse:$2bn Source: Company reports Timeline: Sub-prime crisis

"I have always stated that I ultimately take responsibility for the bank's situation," he said.

"We have worked very hard and have been able to address the firm's most pressing problems, thereby laying the foundation for the long-term success of the bank."

He will be replaced by Peter Kurer, a 58-year-old Swiss lawyer who has spent the last seven years as the bank's main legal adviser.

Mr Ospel said that his successor had considerable experience of the banking sector "and importantly of this bank".

Difficult year

UBS has also unveiled plans to create a new business that would handle US property assets which had become worthless.

It said that it was confident that this would "deal effectively with the firm's real estate exposures and allow the bank to focus on strengthening its core operations".

Mr Ospel said that a decision would be made "within weeks" about how many jobs would go at the firm.

UBS management warned that it expected 2008 to be a difficult year for the firm and the industry as a whole.

In 2007 it reported its first annual loss since UBS was created from the merger of Union Bank of Switzerland and Swiss Bank Corporation in 1998.

Sub-prime loans were lent to US homebuyers with low incomes or with patchy credit ratings. These investments quickly soured as higher interest rates pushed up mortgage payments and triggered a wave of defaults.

As well as resulting in the collapse of Bear Stearns, it has also hit other big Western banks, including Wall Street giants Merrill Lynch, Citigroup and JP Morgan Chase.

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