Financial viruses spreads to the EU
After the US, it’s Europe, & in Europe, after Société Générale, it’s UBS, the largest Swiss bank is latest victim of the most dreaded & infamous 21st century financial shark, commonly identified as the ‘subprime’. UBS has recently announced writing-off $4 billion worth of securities as part of its plans to absorb subprime losses. Earlier in October, the bank had written down $3.6 billion in value of its mortgage-backed securities, & then, in December, it further wrote-off $10 billion. Now the problem will spread because of “near prime mortgages,” said Simon Adamson, Senior Analyst, CreditSights, a London based independent credit research firm, to B&E, adding, “UBS’ main trouble is with Monoline (bond insurance), ALT-A mortgages, Fico & CDO (Collateralised Debt Obligation). This is not end of the story, as banks are not coming clear about their exposure to such instruments; it’s difficult to forecast nature & amount of the crises.”
Both Swiss Federal Banking Commission & US Securities & Exchange Commission intend to ascertain if the UBS had booked inflated prices for mortgage bonds despite knowing their values had dipped. UBS, on its part, disapproves any special audit of itself.
After the US, it’s Europe, & in Europe, after Société Générale, it’s UBS, the largest Swiss bank is latest victim of the most dreaded & infamous 21st century financial shark, commonly identified as the ‘subprime’. UBS has recently announced writing-off $4 billion worth of securities as part of its plans to absorb subprime losses. Earlier in October, the bank had written down $3.6 billion in value of its mortgage-backed securities, & then, in December, it further wrote-off $10 billion. Now the problem will spread because of “near prime mortgages,” said Simon Adamson, Senior Analyst, CreditSights, a London based independent credit research firm, to B&E, adding, “UBS’ main trouble is with Monoline (bond insurance), ALT-A mortgages, Fico & CDO (Collateralised Debt Obligation). This is not end of the story, as banks are not coming clear about their exposure to such instruments; it’s difficult to forecast nature & amount of the crises.”
Both Swiss Federal Banking Commission & US Securities & Exchange Commission intend to ascertain if the UBS had booked inflated prices for mortgage bonds despite knowing their values had dipped. UBS, on its part, disapproves any special audit of itself.
Source : IIPM Editorial, 2012.
An Initiative of IIPM, Malay Chaudhuri
and Arindam Chaudhuri (Renowned Management Guru and Economist).
and Arindam Chaudhuri (Renowned Management Guru and Economist).
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