UBS warns of further write-downs

Swiss banking company UBS, already writing down the value of some assets by $4.1 billion, warned investors Monday that its fourth-quarter results could be hit by a further downturn in the U.S. housing and mortgage markets.

UBS said that although the quarter had started well, its exposure to the U.S. credit market “could lead to further write-downs” and “UBS is not assuming that the quarter will continue as positively as it has begun, or that the current difficulties will be resolved in the short term.”

The bank, one of the world’s largest, is due to report its third-quarter results today.

UBS said this month that it would reduce by $4.1 billion the value on its books of fixed-income securities and loans to heavily indebted companies, resulting in a third-quarter pretax loss of $515 million to $690 million. The company confirmed that estimate Monday.

Once UBS overcomes the current crisis, its management will have to convince shareholders that having an investment bank within the firm is worth the associated risk, said Cubillas Ding, a senior analyst at financial research and consulting firm Celent in London.

Ding said that Marcel Rohner, the bank’s chief executive, “is still in firefighting mode” after his promotion to replace former chief Peter Wuffli in July.

Wuffli was removed two months after UBS closed its hedge fund unit because losses from trading mortgage securities were weighing on fixed-income revenue.

The bank subsequently announced that it would cut 1,500 jobs, or nearly 2% of its global workforce, by the end of the year and replace some top executives.

U.S.-traded shares of UBS fell 58 cents to $53.25.