Swiss Watchdog Has No Comment on UBS Probe Outcome

ZURICH (Reuters) - Switzerland's banking watchdog declined to say what the possible outcome of its probe into UBS (UBSN.VX) could be, saying it would not start the investigation before the Swiss bank had settled its subprime woes.

"In a first step UBS has to get out of this thing and it seems they're well under way," said Alain Bichsel, a spokesman for the Swiss Federal Banking Commission (EBK). "In a second step, of course that is our job as authority, we will look into how it could (have) come this far."

The EBK in a newspaper interview on Sunday said it was putting pressure on the world's biggest wealth manager to overcome the crisis quickly and strengthen its capital base after the bank's hefty subprime writedowns.

The probe would not be an investigation "in legal terms," Bichsel said, but he also refused to describe it as a routine matter, saying the sums involved were too large.

A spokesman for UBS declined to comment, saying it was the bank's policy not to say anything about possible legal or regulatory dealings it was involved in.

UBS earlier this month warned of a full-year loss as it announced a fresh round of subprime writedowns of around $10 billion, bringing the total damage to some $14 billion, and making it one of the most prominent victims of the credit crisis.

Bichsel said the EBK's probe would not start before a shareholder meeting UBS has announced for February, at which it will seek approval to issue a mandatory convertible bond of some 13 billion Swiss francs ($11.3 billion).

Bichsel also said the EBK had done similar investigations into other banks landing in trouble in the past. He declined to say whether UBS itself would be asked to lead the probe, or whether the EBK would execute the investigation.

(Reporting by Douwe Miedema; Editing by David Holmes)