From Bloomberg:
UBS to Sell Stakes After $10 Billion in Writedowns
UBS AG will write down U.S. subprime mortgage investments by $10 billion, the biggest such loss by a European bank, and replenish capital by selling stakes to investors in Singapore and the Middle East.
Europe’s largest bank by assets plans to raise 13 billion francs ($11.5 billion) selling bonds that will convert into shares to Government of Singapore Investment Corporation Pte. and an unidentified Middle Eastern investor, Zurich-based UBS said in a statement today.
UBS scrapped a forecast for a fourth-quarter profit and said it may post a full-year loss. The collapse of the U.S. subprime mortgage market has led to about $76 billion of losses and markdowns at securities firms and banks this year. UBS rose as much as 2.6 percent in Zurich trading after the bank followed Citigroup Inc., the largest U.S. bank, in taking on strategic investors to bolster capital.
…
After the markdown announced today, the bank held about $16 billion in residential mortgage-backed securities as on Nov. 30, “basically zero” in collateralized debt obligations and about $13 billion in so-called super senior securities, or AAA-rated structured debt that gets paid back ahead of other similarly rated bonds in case of a default.Investments in mezzanine CDOs, part of the super-senior holdings, were cut to $7.8 billion from $14.2 billion, reducing the value of these bonds to 45 cents on the dollar, UBS.
From Bloomberg:
Societe Generale Takes On $4.3 Billion of SIV Assets
Societe Generale SA, France’s second-biggest bank by market value, will bail out its structured investment vehicle by taking on $4.3 billion of assets to avoid a fire sale.
The rescue will cause Societe Generale’s ratio of Tier 1 assets, a measure of financial strength, to fall by 5 basis points, the Paris-based lender said today in an e-mailed statement, citing “market conditions” for the decision. Societe Generale said last month that its Tier 1 ratio was 7.7 percent at the end of September.
From Reuters:
Fitch to look at UBS AA+ rating Monday
Fitch Ratings will hold a meeting on Monday to discuss the AA+ ratings on Swiss bank UBS after it announced $10 billion in subprime-related writedowns, a senior analyst at the agency told Reuters.
Fitch in September moved its outlook on UBS to negative, a signal the rating could move down over the medium to long term, and warned that its “tolerance to earnings volatility” at the AA+ level could be tested.
Monday’s writedowns and warning that the bank may make a full-year loss were not factored in then.
“Clearly that’s a very different picture to what we were expecting when we last took ratings to committee in September,” said Gordon Scott, a managing director for financial institutions ratings at Fitch Ratings.
They’ll have to revise the sequence of the letters from UBS to;
SUB
Prime
And UBS stock is up. Go figure. First, lying to investors about the amount of the 4Q writeoff and then diluting your shareholders’ equity must be really good news. I must have missed a class or something in school.