January 12, 2008
The cloud of uncertainty hanging over the credit markets was thrown into sharp relief yesterday as UBS told investors that it still could not be sure about the full financial impact of the credit crunch.
UBS is preparing for writedowns of $13.4 billion (£6.8 billion) against its exposure to the downturn in American sub-prime mortgages.
The Swiss bank wrote to investors yesterday telling them that it could not rule out having to record further losses. “We cannot, at this time, accurately predict the future development of US residential mortgage markets and therefore the ultimate impact on our positions in sub-prime mortgage related securities,” the bank told investors in a letter signed by Marcel Ospel, the chairman, and Marcel Rohner, the chief executive.
Analysts said that UBS’s uncertainty about its financial position underscored the wider nervousness about the credit markets, amid predictions of a fresh round of losses when banks begin to report full-year results in coming weeks.