![]() “Our best bet remains that the Western world suffers a temporary loss in growth momentum in the next few quarters but avoids recession and regain momentum next spring.” “There is no clear sign yet that any of the major economies will fall into stagnation or recession,” he said. Holger Schmieding, Bank of America’s chief European economist, said some strong economic data from the U.S., Britain, France and Japan in August, despite the credit problems, point to “sustained growth, albeit at a slower pace.” The situation looks painful right now but the sooner losses are accounted for, the better.” “While the smoke has not totally cleared, we are seeing more specific losses from the fallout, with banks taking a view of what they need to write off. “At this stage, we are starting to move beyond the psychology of indiscriminate fear,” he said. Helvea analyst Peter Thorne said Credit Suisse’s guidance was “effectively a profit warning.”Ĭubillas Ding, an analyst at Celent, said the way banks packaged assets has spread the risks, making it difficult to gain a “comprehensive picture of who’s holding what.” UBS’ crosstown rival Credit Suisse said Monday that its investment banking and asset management results had been hurt “by recent market events,” but gave no specific figure and said it still expects to report a third-quarter profit of at least 1 billion Swiss francs ($860 million). Last week, a Goldman Sachs analyst slashed his earnings estimates on Merrill Lynch, predicting a rough third quarter for the investment bank, including a $4 billion writedown in assets. warned Monday that its third-quarter earnings are likely to decline 60 percent, as it takes more than $3 billion in writedowns for securities backed by underperforming mortgages and loans tied to corporate buyouts. mortgage loans would cause it to lose as much as 700 million euros ($978 million) this fiscal year.Ĭitigroup Inc. Germany’s IKB Industriebank AG had to be bailed out by a consortium of state-run banks after it said its exposure to subprime U.S. The bank saw its shares plummet and a run on customer deposits after it sought emergency funding. The effect has been felt globally as banks sought liquidity, most notably Britain’s Northern Rock PLC. subprime crisis – spurred by rising defaults on subprime mortgages – spread because lenders had bundled the debts together and passed them along to new lenders worldwide. Dirk Becker of Kepler Equities agreed but said the worst of UBS’ troubles may now be over. “This is clearly not good news and adds to the catalog of bad news that UBS has disclosed in the last year or so,” said Christopher Wheeler, banking analyst in London with Bear Stearns.Ĭlaudia Meier, an analyst at Zurich private bank Vontobel, said the magnitude of the writedowns far exceeded expectations. UBS shares initially fell nearly 4 percent but rebounded to close up 3 percent at 64.50 francs ($55.45), as investors signaled their approval of the management changes. Chief Financial Officer Clive Standish will retire.Īnalysts said they were shocked by the size of the loss, even as they welcomed specifics after weeks of speculation. Rohner said he would take over as investment banking chief, replacing Huw Jenkins, who will step down to become an adviser. “These events have led to the management changes announced today.” ![]() “UBS operates on the principle that management is accountable to shareholders,” said Marcel Rohner, the bank’s chief executive. Deutsche Bank has also signaled that it will take a hit. Similar writedowns are hurting big American banks, including Citigroup, though analysts believe that investors, not individual account holders, will bear most of the fallout. The troubles at UBS, one of the world’s largest banks, underscore the widespread impact of failed U.S. UBS, which already replaced its top executive and closed down a hedge fund unit this year, also said it will cut 1,500 jobs – or nearly 2 percent of its global work force – by the end of the year and replace some top executives. 30, the first quarter in nine years in which it will post an operating loss. The writedown means UBS will post a pretax loss of up to 800 million Swiss francs ($690 million) in the period ended Sept. the impact of the cascading global turmoil. subprime mortgage crisis, illustrating its cascading effect. GENEVA – Swiss bank UBS AG warned Monday that it will write down the value of some assets by a surprisingly high 4 billion Swiss francs ($3.4 billion) because of losses linked to the U.S.
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