UBS posted the biggest loss ever by a bank Wednesday after raising fourth-quarter write-downs on securities infected by U.S. sub-prime mortgages to $14 billion.
Europe’s largest bank by assets said it had a net loss of 12.5 billion Swiss francs, or about $11.5 billion, for the quarter, almost double the estimate of analysts surveyed by Bloomberg. The annual shortfall was about 4.4 billion francs, the first since Zurich-based UBS was created in a merger a decade ago. Shares of UBS fell 1.6%.
The loss topped those reported this month by Citigroup Inc. and Merrill Lynch & Co. The collapse of the U.S. sub-prime mortgage market has led to more than $130 billion in losses and markdowns at securities firms and banks since June.
The losses already cost the jobs of Chief Executive Peter Wuffli, his finance chief Clive Standish, investment-banking head Huw Jenkins and other managers at the securities unit. Shareholders, including the Ethos Foundation, have also called for a replacement of Chairman Marcel Ospel, who said in December he wasn’t thinking of resigning.
The loss, larger than the $9.83 billion reported by Citigroup Inc. on Jan. 15, is the biggest for a bank, said Charles Geisst, a finance professor at Manhattan College in Riverdale, N.Y.
“The damage is enormous,” said Dominique Biedermann, director of the Ethos Foundation in Geneva, which has called for an independent audit of the bank’s controls. “It wipes out profit and shows that an inquiry is needed to make sure it doesn’t happen again, and eventually whose responsibility this is.”
Ospel and Marcel Rohner, who replaced CEO Wuffli in July, told analysts and investors in London on Dec. 11 that record losses were a result of positions created “by a small group of people in one team.” They also ruled out separating the investment bank from the wealth-management unit and instead said UBS would focus on bringing the two businesses closer together while cutting assets and risk-taking in the securities division.
The bank increased markdowns directly linked to the sub-prime market to about $12 billion from the $10 billion it forecast in December and said an additional $2 billion of write-downs were for other U.S. residential mortgage securities.