UBS Pays For Its Subprime Sins With $11.3bn Write-down

Meanwhile, the credit crunch keeps crunching. Another major bank has paid for its sub prime sins with several pounds of equity flesh. “UBS (NYSE:UBS) announced a US$11.3bn write-down and an emergency injection of funds from Singapore and the Middle East that make it as the biggest subprime crisis casualty to date among major European banks.”

Reuters reports. “The world’s largest wealth manager warned shareholders that it was likely to make a full-year loss as it stripped them of their cash dividend,” adds Christine Seib in the Times of London.

The world’s largest wealth manager? The world’s largest wealth-manager is taking an US$11.3 billion write down? You wouldn’t think it’s going to be the world’s largest wealth manager for long, with management like that, would you?

In addition to taking the hefty loss, the company beefed up its capital by selling equity to another sovereign wealth fund. The Government of Singapore Investment Corporation opened its wallet to the Swiss bankers. In exchange for its infusion of capital to shore up the bank’s balance sheet, it takes a 9% equity stake in the company.

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