Western banks final quarter by Claudia Sonea

Subrpime lending market raises serious issues to all Western banks that are forced to write down losses, not only in the fourth quarter, but on the whole year's profit. UBS AG is one of them and on Monday it announced that will write off a further $10 billion in losses in order to raise billions in capital through share sales to Singapore and an unidentified investor in the Middle East. A similar situation happened a month ago with Citigroup Inc., the largest U.S. bank, who sold 4.9 percent of its shares to Abu Dhabi Investment Authority, the sovereign investment fund of the Gulf Arab state, for $7.5 billions. Despite the fact that at the middle of November UBS had predicted a profit for the fourth quarter it will post now another loss at the end of fourth quarter, adding the $10 billion written off to other 4.2 billion from the third quarter. In addition, the bank downgraded the value of some assets by more than 4 billion francs ($3.4 billion) because of exposure to bad U.S. mortgages at the beginning of October. UBS Chairman Marcel Ospel stated that although the bank had so many losses due to subprime US lending market, the 30 billion francs ($26.6 billion) in new money brought in from clients in October and November should have balanced the financial situation. The main investor was The Government of Singapore Investment Corp., a sovereign-wealth fund that paid for 9 percent of the shares 11 billion Swiss francs ($9.75 billion). It is called GIC and its deputy chairman is Tony Tan who made a public statement that Singapore is not seeking control of the Swiss bank; therefore the investment is not conditioned of having a representation on UBS's board. About the move of UBS analysts speak as a being a very bad one- Matthew Clark and Vasco Moreono of Keefe, Bruyette & Woods Ltd said it represents the total opposite of the advice given three weeks ago by Chief Financial Officer Marco Suter. Meantime, UBS shares rose $1.18, or 2.3 percent, to close at $51.66 in New York trading and everyone is waiting to see the where everything is heading. Moreover, the plan introduced by Bush of granting a few months to recover and extend the mortgages in such a way, that the borrowers can cope with the normal course, has still to prove if it's benefic or not. Andreas Venditti, an analyst at Zuercher Kantonalbank, inclines to say it is not because it depends of the bank referred to. Don't go away more to come!

related story: http://news.yahoo.com/s/ap/20071210/ap_on_bi_ge/switzerland_ubs;_ylt=ArShHYqTsy_a6ya6Sha2iFGs0NUE

by Claudia Sonea for PocketNews (http://pocketnews.tv)

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