UBS unveils new risky exposures of $27 bn

ZURICH: Swiss bank UBS said it expected 2008 to be a difficult year after it unveiled $26.6 billion in new exposure to risky US mortgages, but would not say if it would return to profit in early 2008 after huge losses in 2007. UBS confirmed a profit warning issued last month, when they reported a net fourth-quarter loss of 12.451 billion Swiss franc ($11.3 billion) and said it lost 4.384 billion francs for the year, in line with analysts' forecasts.

UBS's net subprime exposure at end-December was $27.594 billion, down from $29 billion at the end of November. But the bank unveiled an additional $26.6 billion in exposure to so-called Alt-A mortgages, which are of higher quality than subprime loans but also considered risky.

The bank took a $2 billion charge on exposure to the Alt-A mortgages. UBS also took a charge of $871 million on credit protection bought from monoline bond insurers.

The bank reported its key wealth management business appeared to hold up in the fourth quarter, with net new money inflows of 31.7 billion Swiss francs, above analysts' average forecasts of 30 billion francs.

But the world's largest wealth manager was hit by fourth-quarter outflows of 16.2 billion francs in its global asset management business as institutional clients pulled money out of equities, fixed-income and multi-asset products. ���
Some analysts had predicted that huge write-downs, running to $18.4 billion, by UBS on its subprime exposures would frighten away wealthy clients.

UBS chief executive officer Marcel Rohner told journalists in a conference call that the bank continued to reduce exposure in January, but declined to make a forecast for first quarter results, saying market conditions were particularly challenging.