UBS chairman stays at helm despite $10 billion writedown
by Gill Montia
The chairman of UBS, Marcel Ospel, has denied that his position is in jeopardy, despite the bank writing down a further $10 billion in relation to US sub-prime mortgage debt.
The Swiss bank, which is the world’s largest wealth manager, has replaced its 2007 cash dividend with a payment in stock and has announced it could report a loss for the full year.
It is also shoring up its balance sheet by borrowing a total of £5.6 billion from GIC (an investment fund run by the Government of Singapore) and an unnamed Middle Eastern investor.
Commentators are surprised that Mr Ospel has not followed the example of Citigroup chairman and chief executive, Charles Prince, in stepping down.
However, sub-prime losses have already seen the departure of Huw Jenkins, the chairman and chief executive of the UBS investment bank, and Mr Ospel believes he must stay at the helm, although he is not expecting a bonus for 2007.
In October, UBS recorded losses of $4.7 billion but market conditions worsened in November and the bank was forced to reconsider the models used to value its sub-prime-related assets.
The large December writedown was deemed necessary to stop market speculation that losses were still to come.
In the past month, UBS has reduced the value of its sub-prime mortgage investments from $38.8 billion to $29 billion.
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