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Last Updated: Monday, 10 December 2007, 16:28 GMT
UBS posts fresh $10bn write-down
Sign outside UBS offices in New York
UBS had warned it may take further hits from the mortgage meltdown
The huge Swiss investment bank UBS has written off $10bn (11.2bn Swiss francs; 4.9bn) in debts linked to the sub-prime US mortgage sector.

UBS had already said in October that the crisis would cost it about $3.5bn.

The firm said these losses were more than its profits last year, and it might now make an overall loss in 2007.

The company also revealed that it had received a $9.7bn injection of funds from the Government of Singapore Investment Corporation.

The sub-prime write-down represents more than a monetary loss for UBS - it's a serious blow to a valuable brand
Robert Peston
BBC business editor

A Middle East investor - reported to be the Oman government - has put a further $1.7bn into the bank.

BBC business editor Robert Peston said that the fact UBS had felt the need to raise so much new capital was "all you need to know about the gravity of what has occurred, both for UBS and for the world financial system".

"It's further evidence of the transfer of financial power from the western economies to the great cash generating economies of Asia, Russia and the Middle East - which are able to dictate the terms on which they prop up our important institutions," he added.

Hedge fund woes

Announcing the fresh write-down - equivalent to its entire net profit for 2006 - UBS said that it had "revised the assumptions and inputs used to value US sub-prime mortgage related positions".

Swiss financial institution
Operates in more than 50 countries
Employs more than 80,000 people
Net Profit of $9.9bn in 2006
Has about $2.6 trillion of assets invested
Source: UBS

In October, UBS had warned that further bad debt write-downs might be necessary in the near future.

UBS chief executive Marcel Rohner and other senior managers are due to address investors and analysts on Tuesday about the bank's prospects.

Mr Rohner replaced Peter Wuffli in the top job at UBS in July.

Although no reason was given for Mr Wuffli's departure, he left after three quarters of falling profits and $300m losses at a failed hedge fund.

A string of global banks have indicated how much they have lost as a result of exposure to investment products linked to US sub-prime mortgages.

So far announced losses have totaled over $70bn, but the final toll might be much higher.

UBS: $13.5bn
Citigroup: $11bn
Merrill Lynch: $8bn
Morgan Stanley $3.7bn
HSBC: $3.4bn
Bear Stearns: $3.2bn
Deutsche Bank: $3.2bn
Bank of America: $3bn
Barclays: $2.6bn
Royal Bank of Scotland: $2.6bn
Freddie Mac: $2bn
Credit Suisse: $1bn
Wachovia: $1.1bn
IKB: $1bn

Source: Company reports

The Organization for Economic Cooperation and Development (OECD) has predicted that losses will reach $300bn, while Goldman Sachs is forecasting $400bn.

And a report by the Bank for International Settlements (BIS) has found that the credit crunch has led to sharp drop in the amount of loans offered by banks to one another.

Bonds and notes worth about $296bn were issued between June and September, BIS said, less than half the amount seen in the previous quarter.

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