UBS takes extra $10bn sub-prime hit

Additional financial misery heaped on Swiss bank as aftershock of sub-prime turmoil leads to a write-down which dwarfs the £1.8bn announced in October

Written by David Jetuah

Accountancy Age, 11 Dec 2007

UBS has announced an additional $10bn (£4.9bn) writedown after updating the models it uses to account for its sub-prime exposure.

The bank said: 'UBS has revised key input parameters of the models that are used to estimate lifetime default and resulting losses for sub-prime mortgage pools. As a result of these revisions, UBS will write down its US sub-prime holdings by approximately a further $10bn.'

The Swiss bank also said that it has been forced to take an £5.6bn capital injection from the Singapore government and an unnamed Middle East investor to shore itself up.

In October UBS had announced a £1.8bn of write-downs from the credit crunch, but this latest disclosure is almost three times larger than the initial hit the bank suffered.

Lloyds TSB also revealed that although it had been affected by the sub-prime crisis it would be taking a relatively small hit of £200m.

Lloyds said: 'Like many other financial institutions, the group has been affected by the recent market dislocation. However, due to our lower risk strategy, the impact has been limited to approximately £200m at 31 October 2007.'