August 11, 2008 / 12:52 PM / 11 years ago

FACTBOX-Key events in subprime fallout at UBS

ZURICH, Aug 11 (Reuters) - UBS AG UBSN.VX, Europe’s hardest-hit victim of the credit crisis, is due to report second-quarter results on Tuesday.

The troubled Swiss bank has notched up some $37 billion in write-downs, but already said a tax credit should save it from another hefty loss in the second quarter. However, analysts still expect further write-downs in its investment bank. Following are key events in the world’s largest wealth manager’s woes, which started last year in May, when it closed down its Dillon Read hedge fund unit.

CLOSES DILLON READ HEDGE FUND UNIT - MAY 3, 2007

UBS shocks investors by closing down its Dillon Read hedge fund unit after posting lower-than-expected first-quarter results, a rare event from the bank, whose track record had earned it a reputation as a serial outperformer.

WRITE-DOWNS TO CAUSE THIRD-QUARTER LOSS - OCTOBER 1, 2007

UBS warns a 4 billion franc subprime hit would cause a third-quarter pre-tax loss of between 600 and 800 million Swiss francs. A few weeks later, UBS’s quarterly loss — its first in nine years — at 726 million franc is within that range.

MORE WRITE-DOWNS - JANUARY 30, 2008

In a surprise statement ahead of its scheduled annual results release, UBS announces another subprime writedown, this time of $4 billion, dragging the bank deep into the red for the year. The new write-downs bring its total from the sub-prime debacle to $18.4 billion.

Two weeks later the bank posts a full-year loss of 4.4 billion francs, announcing tens of billions of dollars in new exposure to risky U.S. mortgages, leveraged finance and complex securities, sending shares tumbling to levels not seen since 2004.

Shareholders then back a $11.9 billion capital injection from Singapore and an unidentified Middle East investor.

WRITEDOWNS DOUBLE - APRIL 1, 2008

UBS doubles its writedowns from the subprime crisis, dumps its chairman, Marcel Ospel, and seeks more emergency capital.

The bank writes down an additional $19 billion in ailing assets, bringing to $37 billion the damage wrought by the subprime crisis and causing a net loss of $12 billion in the first quarter. It proposes its lawyer, Peter Kurer, as Ospel’s successor.

Activist investor and former chief executive Luqman Arnold then demands UBS shake up its governance and structure, seeking to oust the newly named chairman, sell off asset management and the Brazilian division Pactual, placing the rest into a holding company with a view to selling investment banking and reducing the group to its wealth management rump.

SLASHES JOBS - MAY 6, 2008

UBS says it will axe 5,500 jobs and sell billions of dollars of ailing assets in a bid to break free from the subprime crisis. The job cuts, coming on top of 1,500 already completed, would reduce the Swiss bank’s workforce by an additional 7 percent.

UBS also unveils a preliminary deal with U.S. asset manager BlackRock Inc (BLK.N) to sell for $15 billion a portfolio of subprime mortgages with a face value of $22 billion.

The bank launches a rights issue worth $15.6 billion at a third below its latest market price in a bid to lure investors to repair its battered balance sheet.

MASSACUSETTS SUES FOR FRAUD - JUNE 26, 2008

Massachusetts authorities sue two UBS subsidiaries for fraud, saying they misled investors about the safety of auction-rate securities.

The complaint accuses UBS of aggressively selling the investments to customers at a time when a top executive from the bank was dumping them from his personal holdings and large money managers were losing faith in them.

One month later, New York State also sues UBS, accusing the Swiss bank of committing a “multi-billion dollar fraud” by steering broker clients into auction-rate securities that became impossible to sell once the credit market tightened.

SHARES HIT 10-YEAR LOW - JULY 1, 2008

The bank fails to calm investors’ fears of further asset writedowns, dishing out instead a restructuring of top management and sending the shares to a 10-year low.

Shortly afterwards, UBS says it should be saved from another hefty loss in the second quarter by a large tax credit.

AGREES TO BUY BACK $18.6 BLN OF DEBT SECURITIES

UBS agrees to buy back $18.6 billion of debt securities whose value collapsed during the global financial crisis and to pay $150 million to settle charges it misled investors.

The settlement is the largest in a U.S.-wide probe into whether banks sold bonds that were riskier than advertised and follows a day after Citigroup Inc (C.N) and Merrill Lynch & Co Inc MER.N announced they would buy back almost $20 billion of the so-called auction-rate securities between them.

Reporting by Sam Cage; Editing by Paul Bolding

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