Monday, May 26, 2008

UBS Says More Losses on U.S., Global Mortgage Markets Possible

By Elena Logutenkova

May 24 (Bloomberg) -- UBS AG, the Swiss bank seeking $15.6 billion from shareholders to replenish capital after subprime- related writedowns, said it may face more losses from holdings in both U.S. and global mortgage markets.

UBS had losses on non-U.S. residential and commercial real- estate securities in 2007 and the first quarter of this year which ``could increase in the future,'' the Zurich-based bank said in a prospectus for the rights offer published on its Web site late yesterday. It didn't give any more details.

The bank is also evaluating whether to limit or discontinue one or more of its so-called U.S. reference-linked note programs, which ``could result in a charge to income,'' it said.

UBS had created 10 such programs, which sold bonds referenced to a pool of asset-backed securities held by the bank, with a face value of $16.9 billion. At the end of March, the bank's net exposure to reference-linked notes was $8.9 billion.

UBS, which sold $15 billion in subprime and Alt-A bonds to a fund managed by BlackRock Inc. to reduce risk, still has more than $45 billion in U.S. mortgage-related assets, $8.6 billion in leveraged finance commitments and $10.4 billion in student loans on its books. The bank aims to replenish capital after about $38 billion in writedowns related to the U.S. subprime crisis.


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