How much did GIC pay for UBS? 40+ to 50?
Invest 14 billion at 50 per lot is 280 million lots.
280 million * current price of abt 17 = >5 billion.
Paper loss nearly 10 billion? What is prata man doing?????
Invest 14 billion at 50 per lot is 280 million lots.
280 million * current price of abt 17 = >5 billion.
Paper loss nearly 10 billion? What is prata man doing?????
UBS stock plunges, more writedowns predicted
Posted: 17 September 2008 0014 hrs
ZURICH - Shareholders dumped stocks of Switzerland's biggest bank UBS on Tuesday in the aftermath of US investment bank Lehman Brothers' collapse, with analysts predicting more possible UBS writedowns.
UBS closed down 17.2 per cent at 16.64 Swiss francs, after touching an all-time low of 15.18 francs earlier on Tuesday.
The overall market closed down 2.97 per cent.
The stock had lost 73 per cent of its value since the beginning of the year, with its capitalisation plummeting to just 47.9 billion Swiss francs, a fraction of 178.6 billion a year ago, making it a potential takeover candidate.
The bank had sought to reassure the markets following Monday's events, but analysts say confidence was simply lacking in the markets.
Bank Helvea analyst Peter Thorne told AFP: "UBS has the capital to keep on going, but logic doesn't play a role" in the current market situation.
Analysts also believe that the pain is not over for UBS, with some forecasting that the bank would make further writedowns of up to eight billion dollars in the second half of the year and would seek further capital injection.
Dirk Becker, an analyst at Landsbanki Kepler, said: "We expect eight billion Swiss francs in writedowns in the third quarter, but the (earlier) capital hikes are sufficient."
He added that the collapse of Lehman Brothers could trigger a domino effect, "although we are not hoping for it."
Late Tuesday, UBS sought to reassure investors that it was little exposed to Lehman Brothers, saying that its exposure was less than 300 million dollars.
"UBS confirms that its direct and counterparty exposures to Lehman Brothers... are now substantially closed out."
UBS does not expect the total cost of closing out its exposures to Lehman Brothers to exceed 300 million dollars," said the bank in a statement.
It marked a second effort to calm the markets. The bank on Monday said it had "already reinforced its capital base several months ago, and taken other measures to absorb other shock on the markets."
The bank also stressed that it had at its disposal "diversified sources" of revenues and recapitalisation to get over the crisis.
At the same time, Swiss Finance Minister Hans-Rudolf Merz had stepped in to say that the bank had "raised capital in time".
But these assurances failed to calm frazzled investors.
The stock opened down 10.25 percent on Tuesday, after already losing 15.54 percent by the stock market close on Monday.
It remained all day the stock market's worst performer.
The renewed pressure came just two weeks before an extraordinary general meeting when the bank was to seek approval from shareholders on its plans to restructure.
In August, it said it would split its business into three autonomous units.
Along with the overhaul, it said it would address weaknesses such as the way it rewards its staff, by aligning their bonuses to each autonomous unit's financial results.
Struggling to recover from massive writedowns of 42.5 billion dollars on its assets related to high-risk sub-prime home loans, the bank had sought extra capital twice, raising up to 35.4 billion Swiss francs from private investors as well as institutional ones such as Singapore sovereign fund GIC.
For its second quarter, UBS posted a net loss of 358 million Swiss francs (221 million euros, 329 million dollars). - AFP/vm
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