U.S. results may be hard to read for European banks

ZURICH (Reuters) - Investors are bracing for grim news from major American banks when they report full-year results this week, but the implications may be tricky to interpret for European banks such as UBS (UBSN.VX), that have already been badly scalded by the subprime crisis.

UBS is Europe's biggest subprime casualty, with $14.5 billion of writedowns, but even its losses might pale in comparison with Citigroup (C.N), which could write off as much as $24 billion, according to a report on CNBC's website.

As well as Citi and Merrill Lynch MER.N, which has also been badly hit by the subprime debacle, other top banks such as JP Morgan (JPM.N) are reporting their results this week.

Even a huge writedown by Citigroup on Tuesday would not automatically be seen as foreshadowing more bad news from UBS, which announced it latest writedown, of $10 billion, in mid-December.

Citi issued guidance on November 5 that writedowns could total $8-11 billion, after which market conditions worsened.

"The question is one of degree," said Alan Webborn at SG Securities. "Citi gave guidance of $8-11 billion in early November and the figures or writedowns being talked about now are from $16-24 billion. "Trading got worse after November 5, but did the losses double?"

UBS is thought by many analysts to have written down its exposures very aggressively in December, when it also announced plans for a capital injection of 13 billion Swiss francs from Singapore and an unidentified Middle East investor.

"If the news (from Citigroup) is very negative, it could increase suggestions that UBS has not been conservative enough," Webborn said.

Since December, the ABX, a key index used to help put a value on securitized assets linked to subprime, has been relatively stable after a very rocky performance in November.

"UBS has been hinting that it does not have much more to write off," said a Swiss-based consultant to the private banking industry. "If it does, it would be a big shock to the market."

Swiss newspaper SonntagsZeitung reported that UBS, which reports final quarter and full-year results on February 14, may have further writedowns on its subprime exposures of $5-8 billion.

But several analysts said no matter how big any writedowns that Citigroup may announce on Tuesday, they expect any further charges from UBS to be relatively contained.

"I think UBS tried to kitchen-sink as much as possible when they came out with the extra writedown last year," said a credit analyst with a major British bank.

As for UBS's main Swiss rival, Credit Suisse (CSGN.VX), a big player in securitizing commercial mortgages and in leveraged finance, analysts say they will watch for evidence from the U.S. banks of how a weakening in those markets has affected them.

Credit Suisse has so far been relatively unscathed by the subprime meltdown.

(Editing by Quentin Bryar)