UBS explains huge subprime losses
Switzerland's biggest bank UBS on Monday released a report acknowledging that the implementation of its growth initiatives was among the causes of its massive subprime-related losses.
By Agencies |
ZURICH: Switzerland's biggest bank UBS on Monday released a report acknowledging that the implementation of its growth initiatives was among the causes of its massive subprime-related losses.
The 50-page report to shareholders, a summary of a report the bank submitted earlier to the Federal Banking Commission, sets out the principal causes leading to its writedowns of over 37 billion dollars (23.4 billion euros) that made it the world's worst-hit by the subprime crisis.
UBS cited among shortcomings the failure by its market risk control team to sufficiently "challenge" the desk dealing with collateral-debt obligations even when its subprime holdings were growing significantly.
In addition, it said that its compensation structure for employees provided "insufficient incentives to protect the UBS franchise long-term."
The reports said UBS's review saw no "fundamental flaw in relation to its objectives."
But it added that "in hindsight UBS believes that implementation of these particular growth initiatives as well as the level of challenge by Group and Investment Banking Senior Management on these initiatives was a contributing factor to the build up of UBS's Subprime positions which subsequently incurred losses."
The bank said it will also provide a report to the banking commission on what action is has taken, and that the details will in turn be communicated to its shareholders.
The 50-page report to shareholders, a summary of a report the bank submitted earlier to the Federal Banking Commission, sets out the principal causes leading to its writedowns of over 37 billion dollars (23.4 billion euros) that made it the world's worst-hit by the subprime crisis.
UBS cited among shortcomings the failure by its market risk control team to sufficiently "challenge" the desk dealing with collateral-debt obligations even when its subprime holdings were growing significantly.
In addition, it said that its compensation structure for employees provided "insufficient incentives to protect the UBS franchise long-term."
The reports said UBS's review saw no "fundamental flaw in relation to its objectives."
But it added that "in hindsight UBS believes that implementation of these particular growth initiatives as well as the level of challenge by Group and Investment Banking Senior Management on these initiatives was a contributing factor to the build up of UBS's Subprime positions which subsequently incurred losses."
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The bank said it will also provide a report to the banking commission on what action is has taken, and that the details will in turn be communicated to its shareholders.
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