UBS to Post Huge First Quarter Loss on Mortgage Writedowns

April 1, 2008 No Comments »

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UBS said today that it expects a first quarter loss of roughly $12 billion after write-downs of approximately $19 billion related to U.S. real estate and related structured credit positions.

The Swiss banking giant also announced plans to raise about $15 billion to strengthen Tier 1 capital and said it will create a new unit focused solely on segregating and managing its troubled mortgage positions.

Additionally, the bank revealed that its current Chairman Marcel Ospel will not seek re-election at the company’s Annual General Meeting, and will be succeeded by Peter Kurer.

In related news, Deutsche Bank said today that it expects first-quarter write-downs of nearly $4 billion related to leveraged loans and loan commitments, commercial real estate, and residential mortgage-backed securities, largely Alt-A loans.

The German bank noted that the last several weeks have been “significantly more challenging,” but believes its Tier 1 capital will be in line with estimates.

Shares of UBS climbed $3.79, or 13.16%, to $32.59, while Deutsche Bank saw its shares gain $3.46, or 3.06%, to $116.51 in early afternoon trading amid hopes that the worst was behind them.

(photo: heavyweightgeek)

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