Banking on bad news.

Fonction NEWS

Two of Europe's largest banks, UBS and Deutsche Bank, wrote down more bad investments last month, as the subprime crisis crossed the Atlantic. Losses to global financial services now top SFr 190 billion ($190.37 billion), and analysts warn us to expect more of the same.

The most recent UBS writedown, SFr 19 billion, brought the bank's total losses in the nine-month crisis to SFr 37.5 billion--the largest of any bank to date.

Despite a massive asset base of SFr 3.1 trillion, the UBS share price has lost 80 per cent of its value in the interval. The bank holds another SFr 30 billion in exposure.

Deutsche Bank wrote down about SFr 4.0 billion and warned that market conditions have become, "significantly more challenging during the last few weeks".

Some analysts attributed the UBS woes to its decision to graft risky investment banking and securities onto the world's most lucrative wealth management business. In 2005, the bank made a huge bet on American mortgage-backed securities, trusting their AAA ratings.

These risky investments came to account for 40 per cent of its overall profits, relatively high by Wall Street standards. Only five per cent of...

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