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UBS says market turmoil caused Q3 loss
ZURICH, Sept 24 (Reuters) - UBS AG, Europe's biggest bank, said market turmoil since mid-August had caused a
substantial drop in income leading to an expected third quarter loss after taxes of between 500 million ($360 million)
and one billion Swiss francs. ($1=1.390 Swiss Franc)
''Net profit after tax in the second half of the year is expected to be modest,'' UBS said in a statement released before a news conference in Zurich.
''Given the extraordinary nature of most of these negative factors, however, the group's structural earnings power remains unaffected,'' it added.
UBS detailed its income losses since the end of August at 630 million Swiss francs in business in emerging markets and 600 million francs in equities
business.
In addition, UBS said it had had to write down the value of its investment in hedge fund Long-Term Capital Management (LTCM), resulting in a
charge of 950 million Swiss francs.
LTCM announced on Wednesday it was being bailed out by 15 international commerical and investment banks including UBS.
UBS chief executive Marcel Ospel told reporters that two-thirds of the income loss in emerging markets was from Russia.
Ospel said the 600 million Swiss franc loss in equities income was due mainly to volatility swings.
''A large portion of this is likely to be won back,'' Ospel said.
In contrast, he said UBS was not likely to recover ''a large part'' of the lost earnings in emerging markets business and of the LTCB charge.
In the statement, UBS said the economic crisis in Asia, the collapse of Russian markets and resulting uncertainties about Latin American markets had
forced interest rates sharply higher both in emerging markets and for prime issuers of debt securities.
(Note: this article is ''in progress''; there will likely be an update soon.) |
