(ZURICH) UBS may post US$6.9 billion of additional writedowns and seek to raise more capital, Citigroup Inc said yesterday after UBS chairman, Peter Kurer told Swiss newspaper Finanz & Wirtschaft on Wednesday that the Swiss bank will not need more funds.
The Zurich-based company, which wrote down US$38 billion over the past three quarters, still carries US$83 billion of 'risk exposures that are likely to require further markdowns', London-based Citigroup analyst Jeremy Sigee said in a note yesterday.
Mr Sigee, who rates UBS a 'hold' with a 'high risk' caveat, estimates that the company may post a loss of 4.5 billion Swiss francs (S$6 billion), and announce writedowns of as much as seven billion francs when it reports earnings on Aug 12.
He blamed a slump in financial markets for asset price declines, and said that UBS may need to raise more capital, either from asset sales or from shareholders.
Banks and securities firms have turned to investors for US$322 billion to replenish reserves after US$403 billion of writedowns and credit losses, tied to the collapse of the US sub-prime mortgage market. UBS trails only Citigroup in credit losses and capital raising after turning to investors for US$29.5 billion since the credit crisis started a year ago.
Speculation that financial firms would need more funds helped drive an index of European banking shares down 8.3 per cent in the previous five days. UBS has fallen 56 per cent this year. -- Bloomberg
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