UBS hit by sub-prime investments

Source: Stock Market Digital

Date :10/1/2007 4:04:50 AM

UBS has said it will have to write down losses of more than 4 billion Swiss francs ($3.4 billion) in relation to bad investments in risky US home loans.

The Swiss wealth manager admitted that the losses will see its earnings in the third-quarter slump by between 600 million and 800 million Swiss francs.

UBS called the results, which mark the first loss for the bank in nine quarters, "unsatisfactory".

The firm has announced that it will now cut 1,500 jobs and carry out extensive management changes.

UBS's announcement is likely to prompt further concerns amongst investors about the extent the downturn in the US housing market will have spread to the wider economy.

Many banks and hedge funds have been investing in bundles of debt, containing risky sub-prime mortgages which have seen record defaults in the face of higher US mortgage rates.

October 1 2007