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Strategies & Market Trends : Waiting for the big Kahuna -- Ignore unavailable to you. Want to Upgrade?

To: Haim R. Branisteanu who wrote (30098)	10/3/1998 6:56:00 PM
From: flickerful	Respond to of 94695

UBS chairman resigns after LTCM crisis 3 october 98 / financial times By Clay Harris and Philip Coggan in London UBS, Europe's biggest bank, yesterday lost its chairman and confessed to gross shortcomings in risk management as the Long-Term Capital Management affair continued to shake financial markets. Mathis Cabiallavetta is the biggest casualty so far of the US hedge fund's near collapse. Less than a year ago he led Union Bank of Switzerland into a merger with Swiss Bank Corporation which promised to transform European banking. His departure, along with three other senior executives, was announced as UBS scrambled to restore confidence after seeing its market value slide by a third in the week since it disclosed a SFr950m ($682m) charge relating to LTCM. UBS said Mr Cabiallavetta had "personally and spontaneously" offered his resignation. The house-cleaning in Zurich halted the fall in UBS shares, which recovered SFr10 to SFr285. But there was scant solace in general for European financial shares, which fell 4.2 per cent. Stock markets took an initial pasting as worries about the outlook for the world economy and the health of the banking sector continued. A rebound on Wall Street, where the Dow Jones Industrial Average had turned a 90 point loss into a 120 point gain by lunchtime in New York, helped Europe's bourses come off their lows. In Frankfurt, the DAX index dropped below 4,000 at one stage before recovering to finish 1.8 per cent off at 4,019.31. Over the week as a whole, the German market was down 12.3 per cent and the Amsterdam and Zurich bourses also suffered double-digit declines over the same period. In London, the FTSE 100 index fell 157.8 to 4,750.4 leaving it 23 per cent below the all-time peak recorded in July. In a sign that all banks are vulnerable in current conditions, ABN Amro cut its profit forecasts. The largest Dutch bank, which had no exposure to LTCM and relatively little to Russia, said it now expected 1998 net profits only to be roughly equal to the figure for last year. In Italy, the revelation that the central bank had invested $250m of foreign exchange reserves in LTCM created a growing political storm. Questions were asked in parliament about the role played by Alberto Giovannini, a leading economics professor who worked for the Italian Treasury before moving to LTCM in 1994. LTCM has been extremely active in Italian government securities markets in recent years. Several US investment banks, meanwhile, denied rumours that they were about to make big job cuts in the wake of Thursday's announcement of 1,200 losses at ING Barings, the Dutch-owned corporate and investment bank. The UK's Financial Services Authority said "nothing untoward" had been thrown up by its review of regulated firms' exposure to hedge funds.