December 10, 2007

FLASH: Mega-bank UBS does the mortgage meltdown pokey for another $10 billion in losses (yes, that's "billion"). And that's what it's all about.

You put your toxic loan portfolio in,
You put your billions in writedowns out,
You put your CIVs and CDOs in,
And you shake it all about,

You do the mortgage meltdown pokey
and you turn your balance sheet around
And that's what it's all about.

(Sure is gonna get interesting once the banks and their incompetent auditors realize it's not just the subprime debt that ain't getting paid back. Still early days for the mortgage meltdown pokey - lot of dancing still to come!)

Swiss banking giant UBS said Monday that it will write down the value of its subprime mortgage holdings by a further $10 billion, leading to a loss in the fourth quarter and potentially wiping out all its profits for the year.

The bank also announced plans for a capital injection of 13 billion Swiss francs ($11.5 billion) from the government of Singapore and an unnamed investor in the Middle East.

"Conditions in the U.S. mortgage and housing markets have continued to deteriorate, and we have updated our loss assumptions to the levels implied by the current distressed market for mortgage securities," said CEO Marcel Rohner.

The group took a write-down of around $3.4 billion in early October, but warned later in the month that it may have to take further charges if the U.S. housing market deteriorated further.


bickerer said...

Swiss banking giant UBS AG said Monday it will write off a further $10 billion on losses in the U.S. subprime lending market

One of the things I've learned from this blog is that the rot is not just in the US, but in Europe as well. Imagine that means a secondary implosion will occur when the same shit hits the fan hard there. And Dubai will own all our major banks.

Wonder what the Wall Street bonuses will be. They've done a fine job this year.

Anonymous said...

UBS shareholders are singing this song this morning:

Splish splash, I was taking a bath
Long about a Saturday night
A rub dub, just relaxing in the tub
Thinking everything was alright

Well, I stepped out the tub, put my feet on the floor
I wrapped the towel around me
And I opened the door, and then
Splish, splash! I jumped back in the bath
Well how was I to know there was a party going on

keith said...

Gotta love banks taking massive hits like this that wipe out their entire year's profits and the stock goes up as shareholders think that's the last of it

Hint - it's just the start of it, not the last of it.

Wait until the UK loan portfolio melts down next, and wait until all the other US collaterized debt blows up too (alt-a, negative-am, 2nd mortgages, credit card debt and hell, even the conforming loans)

We know what's coming, you'd think the banks and their auditors know too (and admit it)

Ed said...

and yet futures point to another big rally on Wall St today.

Makes sense to me.

Anonymous said...

How much cash is in the middle east. Who is going to buy that oil when this reccession turns depression. According to BOOOOOOSH we are all flush I guess we will.

Ed said...

Come to think of it, makes sense after all. The first few announcements of losses were big "holy shit we're fucked" news. The next few were, "damn it not again" news. Now it occurs so often it's more like "hey did you hear some bank lost some money or something" news.

People have been numbed to just expect the losses and it doesn't affect them anymore.

Mammoth said... all this going to push down the value of the Euro (against the US Dollar)?

Anonymous said...

buy BUY, BYE BYE Dick.

Great Job, George.

Marky Mark said...

Until the balance sheets reflect the off balance sheet crap and they are marked to market, nobody knows (or wants to know) the truth.

But from these actions – could it be anything but bad news (selling treasury stock, 10 B write down, cancel the 2007 dividend, sell part of your company (soul) to the arabs, etc.).

If this was any generic company – the stock would tank…But it actaully went up.

So what is keeping it up?

Marky Mark

Ella said...

Oh my!

UBS writes down $10 bln of CDO's and RMBS, total market exposure at $29Bln of same. Says CDO warehouse position cut to zero.

"In October the bank downgraded the value of some assets by over 4 billion francs ($3.4 billion) because of losses linked to the U.S. mortgage crisis."

UBS is raising about $17 Bln in new cash, cancels its cash dividend and substitutes it with a share dividend.

So, $17 Bln - $13.4 Bln = $4.6 Bln. and I am having a hard time understanding why the share price is moving up. Still trying to figure out what the GAAP accounting standards have to do will all of this.

Anonymous said...

It looks like they flushed all of the CDO garbage out of their system. Now they get to deal the with the CMO CLO RMBS CMBS ABCP SIV and other assorted structured junk debt backed by inflated asset prices or in some cases nothing at all except for Laquisha's 600 FICO score.

Eric said...

"and yet futures point to another big rally on Wall St today."

Bonuses are too close to just lose them now. Gotta keep pumping and after the bonus check clears they don't care what happens.

Anonymous said...

Most of these write-downs are forced mark-to-market losses, not cash losses. The market is irrational, though, so look for a good amount of these write-downs to pop back up as gains a few years later, once liquidity is finally restored. As bad as a lot of these "securities" are, they are trading at prices that assume 50-70% default rates and recoveries of less than 50 cents on the dollar.

Anonymous said...

Yet again...

It's all about the derivative market!!!

vegas crash watcher said...

The rest of the world is worse off than the US and will buy US treasuries for safety. The dollar will rise again, and the Euro is toast.

The great deflation should begin next year, and hopefully civil war in 2009. A lot of socialists need culling.

whitetower said...

Getting loans from Middle East "investors" is, literally, one step from getting a loan from Tony Soprano -- it's dirty, quasi-criminal money.

Princess Mononoke said...

whitetower said...
>>getting a loan from Tony Soprano -- it's dirty, quasi-criminal money.
December 11, 2007 3:00 AM

YEP YEP YEP.... Very very soon most, if not all of our corporations, investment banks, resources etc will be foreign owned.

So I have to ask the question??? WHO will really be pulling the STRINGS over here??? HHhhhmmmm....