4.00 PM Saturday, 13 July 2024
  • City Fajr Shuruq Duhr Asr Magrib Isha
  • Dubai 04:09 05:34 12:27 15:49 19:15 20:40
13 July 2024

UBS set to announce historic loss of $17.2 billion in its 2008 results

UBS posted a net profit of CHF 296 million for the third quarter in November. (GETTY IMAGES)


Switzerland's largest bank UBS is expected to announce the biggest loss of $17.2 billion (Dh63.17bn) in the country's history when it releases its results for 2008 today.

But if there is a silver lining for the bank, which has been the target of a huge state rescue package, it lies in the fact that analysts say UBS has now hit bottom after its stock price fell 82 per cent since the summer of 2007.

For that reason, the loss of nearly CHF20 billion ($17.2bn) the bank is expected to announce for 2008 tomorrow should not surprise markets, analysts say.

"The bank has already publicised its problems to a large degree and the fall in the stock price should not be so large," said a trader in Zurich.

Last November, UBS posted a net profit of CHF 296m for the third quarter following a year of losses, but warned that a renewed loss was looming for the following quarter.

The numbers expected to be unveiled tomorrow are staggering, reflecting the fact that UBS was one of the banks hardest hit by the US sub-prime loan crisis.

Its annual net loss is believed to be between 14.1 billion and 19.4 billion Swiss francs, according to estimates from Swiss financial news agency AWP.

The loss for the fourth quarter alone is expected to be between CHF 5.9 billion and CHF 7.5bn for the bank, which has already written down about $46.9bn worth of assets.

"The fourth quarter was clearly difficult for UBS," a Deutsche Bank commentary said, adding however that removing "toxic" non-liquid assets with help from the Swiss central bank along with restructuring efforts meant "UBS has passed the worst". Customer confidence in the bank has in turn taken a hit, posing a major problem for UBS, which has haemorrhaged capital as a result. Customers pulled some CHF 83.6bn from the bank in the third quarter.

Under a rescue plan unveiled in October, the Swiss Government injected CHF 6.0bn in new capital to

UBS and lent $54bn to the bank to transfer its non-liquid assets into a separate fund.