UBS details subprime losses

UBS admitted on Monday half of the $18.7bn writedowns it suffered last year on US subprime securities had stemmed from the decision by traders in its investment banking division to hold, rather than repackage and sell, one particular category of security linked to US residential mortgages.

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The decision, which contrasted with UBS’s traditional role as a middleman, was the single main factor behind the losses that turned UBS into the biggest European casualty of the subprime crisis. UBS says it was made because traders, benefiting from cheap funding thanks to the group’s big private banking business, thought they could make more money holding such securities than passing them on to clients.