UBS to Post $690M 3Q Loss
ZURICH, Switzerland – UBS SA (UBS), the largest Swiss bank, said Monday it would post a pretax loss of up to $690 million in the third quarter mainly because of losses linked to the U.S. subprime mortgage crisis.
The losses will hit UBS's Investment Bank, but "our Global Wealth Management & Business Banking and Global Asset Management businesses continue to record good results," said a company statement.
The loss will result in the shedding of 1,500 jobs from the bank's work force of 80,000 people by the end of this year, Chief Executive Marcel Rohner said in a conference call.
He also said the bank was making changes in top management as a result of the losses, and that he would take over as investment banking chief, replacing Huw Jenkins, who will step down to become an adviser. Group Chief Financial Officer Clive Standish will retire, Rohner said.
"UBS operates on the principle that management is accountable to shareholders," he said. "These events have led to the management changes announced today."
"Following a write down of positions in fixed income, rates and currencies, mainly related to deteriorating conditions in the U.S. subprime residential mortgage market, UBS is likely to record an overall group pretax loss of between 600 million francs and 800 million francs ($515 million to $690 million) for the third quarter, ended Sept. 30," a bank statement said.
It said pretax profits for the first nine months of 2007 will be about $8.6 billion.
Rohner noted that when second quarter results were announced in August he said that UBS could expect a "very weak trading result in the Investment Bank" if turbulent conditions continue to prevail throughout the quarter.
"In fact, conditions remained turbulent, so we will make an overall pretax loss at group level for the quarter," he said.
UBS's share price dropped 3.8 percent to $51.79 in trading on the Zurich exchange.