UBS AG, one of the hardest hit banks in the subprime mortgage crisis, said on Tuesday that it had further losses and writedowns of US$5.1 bn during the second quarter of 2008.
Switzerland's largest bank, which also announced further management changes, said its net loss attributable to shareholders for the three months ended June 30 was 358 Swiss francs (US$331 mn), compared with a profit of 5.5 bn francs during the year-earlier period.
``The positive sentiment seen at the end of first quarter 2008 that the credit crisis may be easing was short-lived as trading conditions deteriorated significantly in the second half of May, in particular for assets related to US residential real estate as well as other structured credit positions,'' a bank statement said.
The new results come on top of writedowns totaling US$37.4 bn over the previous nine months. The bank said it had net new money outflows during the quarter of 43.8 bn francs (US$40.5 bn), compared with inflows of 34 bn francs in the second quarter 2007.
``This occurred in the context of continuing credit market turbulence and its impact on the firm's operating performance and reputation,'' the statement said. It said that at the end of the quarter total invested assets stood at 2.8 trillion francs billion (US$2.6 trillion), 15 per cent down from the 3.3 trillion francs invested in the same quarter a year earlier. UBS shares rose 2.2 per cent to 23.70 francs (US$21.92) on the Zurich exchange. The bank said its staff declined by 2,387 people to a total of 81,452 during the quarter, with most of the reduction in the investment bank, blamed for most of the bad investments in US subprime securities. UBS said it was making changes in its strategic direction and launching ``a comprehensive program to re-engineer its business,'' making its divisions autonomous and more agile in managing trends in the financial industry. This, it said, would enable it better to navigate ``the uncertain near-term outlook for global financial markets and potential changes in regulatory capital requirements.'' ``Our review has clearly revealed the weaknesses associated with the integrated 'one firm' business model,'' said Chairman Peter Kurer. ``Some of these weaknesses, such as the blurring of the true risk-reward profile of individual businesses, are the source of substantial risk, as we have seen in the past few months.'' Chief Executive Marcel Rohner said UBS had already reduced risk exposure, costs and personnel of the investment bank. ``I am determined to make the management of UBS more effective,'' said Rohner. The bank announced four new candidates for the board of directors to be selected at a shareholders meeting Oct 4 - William G Parrett, retired chief executive officer of Deloitte Touche Tohmatsu; Bruno Gehrig, chairman of Swiss Life Holding and vice chairman of Roche Holding AG; Sally Bott, group human resources director of BP plc; Rainer-Marc Frey, who has held senior positions in a number of investment management companies. ``These candidates bring specific and relevant experience to UBS, namely in global financial services, the fields of change management and regulation and the perspectives of institutional shareholders,'' UBS said. Their selection is part of the new corporate governance framework started July 1 to strengthen the oversight role of the board. UBS also announced the appointments of Markus Diethelm as group general counsel and John Cryan as group chief financial officer.
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