Source: Economist
UBS made public a summary of an internal investigation into the mistakes that led it to write down a total of $38 billion, the most by any European bank hit by the subprime crisis. The company laid most of the blame on positions taken by its investment-banking arm. To rebuild its fortunes, the Swiss bank is reducing the size of its investment-banking business to refocus on its private-client base.
Other banks added to the list of woes stemming from the mortgage markets. Credit Suisse, UBS's rival, swung to a loss in the first quarter largely because it took SFr5.3 billion ($5.0 billion) in writedowns. Bank of America said its first-quarter profit had fallen by 77% compared with a year ago, and that it would increase its provision for credit losses by $5 billion. Citigroup booked another $13 billion in writedowns and made a quarterly loss of $5.1 billion. And Royal Bank of Scotland said it needed to raise £12 billion ($24 billion), about a third of its market value, in a rights issue to help protect its core capital.
Total: USD 85 billion
The thing is, despite these writedowns, investors, the US FED and even our GIC still have great confidence in them by pumping billions and hoping long term will be good. That alone is great. Does the brand name or the magnitude of the issue got something to do with it?
ReplyDeleteLike they say, if you owe and cannot pay the bank hundreds of millions, it's the bank's problem but if you owe and can't pay a few thousand, it's your problem.