BY STEVE GOLDSTEIN
UBS AG warned Monday that it may have to record losses on non-U.S. real estate as it seeks nearly $16 billion from shareholders to repair a dented balance sheet.
In a 925-page prospectus for a share sale, UBS said economic and market conditions were volatile and challenging into the second quarter. "UBS remains very cautious about the net new money outlook in the near term," the world's top manager of assets said.
The Swiss bank last week said it plans to sell $22 billion of subprime and Alt-A U.S. residential-mortgagebacked securities to BlackRock Inc. for $15 billion, with UBS providing an $11.25 billion loan to the fund manager in the process.
But as the subprime troubles cool down, others have heated up. UBS's exposure to auction-rate securities, used mostly in municipal financing, increased to 11 billion Swiss francs ($10.7 billion) from six billion francs during the first quarter.
UBS said in the prospectus that its unprofitable positions in real-estate markets outside the U.S. "could increase."
Altogether, UBS has taken about $19.2 billion in write-downs and losses for an $82.6 billion portfolio of securities tied mostly to the U.S. housing market.
UBS already has issued 13 billion francs of convertible notes to sovereign-wealth funds in Singapore and a Middle Eastern country it hasn't named. It is now selling 16 billion francs of stock to existing shareholders at a 31% discount to Wednesday's close.
Shares in UBS dropped 1.7% in the Swiss market and are down more than 60% over the past 12 months.
No comments:
Post a Comment