Global Banks Face Up To $203B More In Write-Downs, UBS Says

By Daniel | February 15, 2008

Last Update: 2/15/2008 8:48:30 AM

By Ed Welsch
Of DOW JONES NEWSWIRES

NEW YORK (Dow Jones)–Global banks face up to $203 billion in further write-downs
from the crisis facing monoline bond insurers and from bad bets on
mortgage-backed securities and leveraged buyouts, UBS AG (UBS) said Friday.

“The problem is broadening from just subprime CDO write-downs to potentially a
much bigger credit problem” that may touch even prime mortgages, credit cards and
commercial real estate, UBS analyst Philip Finch said in a research note.

This is unwelcome news for international banks, which already suffered $150
billion in credit market-related write-downs tied to last year’s subprime
fallout.

UBS itself wrote down more than $18 billion in assets last year and may need to
write down up to another $18 billion this year, a Citigroup analyst said
Thursday.

Finch figures banks face between $40 billion and $120 billion in write-downs
related to the crisis facing monoline bond insurers. The sector faces intense
pressure from regulators and New York Gov. Eliot Spitzer, who warned Thursday
that regulators may act against top insurers if they can’t raise enough capital
to fix their financial problems in the coming few days.

The sector also faces another $50 billion in write-downs from mortgage-backed
conduits and structured investment vehicles, $18 billion from collatoralized
mortgage-backed securities and $15 billion from leveraged buyout debt, Finch
wrote.

The write-downs also will have the side effects of cutting banks’ revenue as they
become more risk-averse and scale back their high-risk, high-yield businesses,
Finch wrote.

A regulatory backlash against global banks may also be brewing, Finch notes,
saying an April report by global banking regulators may recommend more strict
capital requirements for global banks.

-By Ed Welsch, Dow Jones Newswires; 201-938-5244; edward.welsch@dowjones.com

(Goran Mijuk contributed to this article.)

(END) Dow Jones Newswires

February 15, 2008 08:48 ET (13:48 GMT)

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