Swiss bank UBS writes off $10 billion more

ZURICH, Switzerland -- UBS AG will write off a further $10 billion in losses from the U.S. subprime lending market, the Swiss bank said Monday, and raise billions in capital through share sales to Singapore and an unidentified investor in the Middle East.

UBS said it will post a loss for the fourth quarter and may now record a loss for the full year, as well. That comes on top of the amount written off in its third quarter, making $12.6 billion in writedowns from the subprime crisis by UBS this year.

The Government of Singapore Investment Corp., a sovereign-wealth fund, is investing $9.75 billion, while an undisclosed strategic investor in the Middle East is contributing $1.77 billion.

As recently as the middle of November, UBS had predicted a profit for the fourth quarter despite ongoing speculation about its subprime holdings.

"Conditions in the U.S. mortgage and housing markets have continued to deteriorate, and we have updated our loss assumptions to the levels implied by the current distressed market for mortgage securities," Chief Executive Officer Marcel Rohner said in a statement.

"In our judgment these writedowns will create maximum clarity on this issue and will have the effect of substantially eliminating speculation," he said.

Western banks have lost billions on exposure to U.S. subprime loans. Cash-rich sovereign funds have been stepping in to help them boost capital and claim a chunk of company ownership.

Last month the Abu Dhabi Investment Authority, the sovereign investment fund of the Gulf Arab state, acquired a 4.9 percent stake in Citigroup Inc., the largest U.S. bank, for $7.5 billion.

Tony Tan, deputy chairman of GIC, said the 9 percent stake does not mean Singapore is seeking control of the Swiss bank.

"GIC is now the single largest investor in UBS and this is the largest investment GIC has made in any company," Tan said at a news conference in Singapore. "We did not make it a condition that our investment should have a representation (on UBS's board.) We have no desire to control the business of the bank."

It was the first time the publicity-shy GIC, which manages Singapore's foreign reserves, has revealed a major investment.