UBS announced yesterday it would take an additional $10-billion write-down related to sub-prime loan investments this quarter. But it also announced it has received $11.5 billion in capital from the sovereign fund of Singapore, as well as an undisclosed Middle East investor.
According to The Wall Street Journal, the bank’s larger-than-expected write-down comes as it began, using more conservative valuation methodologies for its investments tied to U.S. sub-prime mortgages. “The ultimate value of our sub-prime holdings … remains unknown,” the bank said yesterday. The bank had already taken a $4.4-billion write-down in the third quarter.
The Swiss firm joins fellow mega-bank Citigroup in sub-prime write-down race and bail-out—Citigroup received $7.5 billion in capital from the Abu Dhabi Investment Authority just two weeks ago, giving the Emirates country a 4.9-percent stake in the company.
The Government of Singapore Investment Corp contributed roughly $10 billion of the total capital while the unknown Middle Eastern investor contributed the rest for a total stake in the company of approximately 12 percent. It was a good time to buy: UBS stock is down 24 percent this year.
That fact is what irritates UBS financial advisors. “Starting two years ago I sold all my clients’ financial stocks,” says one. “Now I own one, UBS, and it’s only in my account,” says the bitter UBS producer. Another said the bank’s break from its conservative and stable roots hasn’t affected his business one bit. “My clients’ relationship is with me—not with UBS—and they understand the bank isn’t going anywhere,” he says.