UBS writes down £1.67bn in US home loan losses
by Gill Montia
Story link: UBS writes down £1.67bn in US home loan losses
UBS, the global investment and financial services group, has reported that it will be writing down losses totalling £1.67 billion, in relation to losses in the US home loans sector.
The group expects to record a loss in its third-quarter results, the first in nine quarters, and as a result will be undertaking a management restructure that is likely to lead to the loss of 1,500 jobs.
It has also suspended its share buyback programme, a decision that will be reviewed once the business returns to profitability.
Financial analysts had expected some losses at UBS, however, the scale of the write downs relating to securities backed by sub-prime mortgages, has come as a shock.
The results may also be seen by investors as evidence of the US sub-prime mortgage crisis spreading into the global economy.
Credit Suisse has already indicated that it will report lower third quarter results because of the deterioration in the sub-prime residential mortgage backed securities market.
In the case of Credit Suisse, however, quarterly earnings are still expected to be profitable.
The news will put further pressure on the global money markets, where banks are unsure of the level of assets held by even the most established of names, and have been reluctant to lend to one another.