UBS surprises with break-even forecast
July 4, 2008 by Tisa Silver
Filed under Finance
Who knew that a Swiss investment bank was the one hit hardest by the credit crunch?
UBS has written down over $38 billion since news of the crisis broke last summer and shares of the Swiss bank have lost more than half of their value since the start of this year.
Earlier this week, more negative rumors swirled regarding the bank’s need for financing, generating fears that shareholders would be asked to contribute more money. But, today UBS surprised the world with the announcement of a tax credit that could be large enough to offset possible write-downs for the second quarter.
The timing of this 3 billion Swiss franc credit is impeccable. News sent UBS shares up over 8 percent in trading overseas until…Moody’s issued a downgrade.
The rating agency expressed doubts about the financial strength of UBS and the quality of its debt. News of the downgrade sent shares down, reversing the 8 percent gain and losing over 1 percent on the day.
UBS has been rescued from another quarter of massive write-downs, but the bank has much ground to cover in order to restore long-term confidence.
UBS is definitely in trouble. I know a friend that had been working there for almost 5 years that was just recently laid off. Not to mention how disappointed many of my other friends that were interested in working there after graduating this spring were.
It sounds really iffy to me. I definitely wouldn’t be one to invest in it, but at the same time, I wouldn’t bet that it’d go down either. It seems like maybe sitting on your hands would be the best possible thing to do with this stock.
where to begin…the ratings agencies are now laying into everybody and being extra stingy with ratings to try and cover their crookedness or incompetence when rating issues over the past decade. Their mis-ratings earlier on CLO’s, CDO’s and the like and their hammering of companies now has greatly contributed to the market’s loss of confidence and disallusionment with securities and securitization. Of course, maybe their lie was the only thing that allowed the securities to be sold in the first place. Who knows if UBS is really in trouble. I’m sure that the ratings agencies are at least partly to blame if they are.
This is another issue of rumors from the truth. It looks like UBS is in trouble, but there forecast is expected to be break even. So you’re not sure who to believe. In the short term UBS might have keep investors, but we will see long term if they stay with UBS.
It is very strange to see the massive strugles of the investment bank superpowers. UBS is in real trouble here along with several other banks. You would think that they would be able to pull through esspecially with the tax help, but as we saw from the Bear Stearns earlier this year liquidity issues can be deadly. Seems to me UBS is sending the same warning signs as Bear. Investors beware Bear Stearns stock prices went from well over $100 to $2 when JP Morgan aquired them.