Friday, 1 February 2008
U & Us - parted from honesty (UBS)
Much of the focus of the UK stock market at the moment is the scale write-downs due out of RBS, Barclays, HSBC etc. The speculation alone on the major banks accounts for over 1% of movements in the market on any day in January. Volatility rules the day.
Yet the banks quell speculation by saying nothing is wrong, whilst doing little to prove nothing is wrong and as we all know actions speak louder than words. I am awaiting RBS's results at eh end of this month with much anticipation. A disaster there and this really will be a bad year.
However, spare a thought for shareholders in UBS. The worst affected bank in Europe in terms of exposure to sub-prime lending. A group of intelligent shareholders clubbed together to demand an independent audit of its overall sub-prime position in order to finally get to the bottom of how much mess the bank was in. The Management are strongly against this; does not leave room for much hope there does it? The share price is dropping still, down nearly 40% year on year.
To add to this, UBS has also tapped up a sovereign wealth fund- Singapore in this case, to urgently hand over some money to repair its balance sheet. However, the nice preferential rate of interest given to Singapore is denied to all other shareholders and there is a vote today for its 'alternative capital structure.' Again management are so desperate they will agree to anything in return for large dollops of money.
UBS is in a very bad place indeed this week, having announced huge write-offs too. Somehow I don't think they will be running their cheesy adverts again anytime soon.
Posted by CityUnslicker