Keep an eye on UBS. If that behemoth falls, then I’m heading for the hills.
Analysts said Switzerland’s largest bank is likely to come under further pressure this week as investors grow increasingly concerned about its investment banking business and question whether the recently announced measures to split the bank’s investment banking, asset management and wealth management units are enough to restore confidence.
“The meltdown on Wall Street will limit UBS’ ability to resolve its investment banking difficulties – who would want to buy this part of the bank’s business now,” said a Zurich-based banking analyst.
Is UBS also on the ‘collapse’ line?
We cannot address rumors and would rather wait for confirmation, but the trigger for today’s move may have been the talk on the street that UBS was looking for ‘help’ from the Swiss National Bank.
Take that kind of potential headline, couple it with a money-market fund halting redemptions, add the Russian markets crashing, and top it off with the Dow losing 350 points the day after AIG’s demise is averted. Proposed stiffer rules on ‘naked’ short-selling may have had quite a bit to do with equity position unwinds as well. Market such as gold’s only need a relatively small injection of buyers’ money to make the type of move which we are witnessing today.
After rivals in the United States took a renewed pounding when the New York market opened, UBS shares fell to SFr15.18 ($13.55), an all-time low, before rallying and closing Tuesday down 17.21 per cent at SFr16.64.
That followed a tumble of 14.8 per cent on “Meltdown Monday”, when US investment bank Lehman Brothers went bankrupt, its Wall Street rival Merrill Lynch was sold at a knockdown price and the world’s largest insurer, AIG, had to go cap in hand to the Federal Reserve for an emergency bailout.
Possibly related:
Billionaire sues UBS, claiming fraud
UBS Short-term debt costs soar
Has taken $42.5 bn in writedowns, possibly another $5 bn to come
