UBS (UBS) Signal: Bank Losses To Heat Up Again

By Douglas A. McIntyre Updated Apr 28, 8:52AM EDT · Published Mar 30, 5:01AM EDT

Bank stocks have rallied for weeks on the premise that the first quarter may be the turning point for the industry. Losses from mortgage derivatives may be falling, although that does not necessarily make sense given the state of the housing market. Consumer credit and commercial real estate losses may be only modest. Citigroup (C) has signaled that its results are better than expected in the first two months of the year.

But, the banking bubble is about to burst. Last last week, Jamie Dimon, the CEO of JPMorgan (JPM), said that March was a rough month. Much worse, there are media reports that UBS (UBS) is facing billions of dollars in losses and significant write-offs.

According to Reuters, “Shares in UBS, the world’s largest wealth manager in terms of assets, fell 7 percent on Friday as rumors swirled of a profit warning and more writedowns in the first quarter.”

Although the talk has died down somewhat, a minority of analysts still believes that more large losses at US banks will trigger the need for much larger investment of federal government capital. The nationalization of banks is still not out of the question. That means that banks stocks could still go to zero.

The problems at UBS may be unique to the bank. But, because it is one of the largest financial institutions in the world and its balance sheet is not terribly different from other global banks, that is not likely.

Douglas A. McIntyre

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About the Author Douglas A. McIntyre →

Douglas A. McIntyre is the co-founder, chief executive officer and editor in chief of 24/7 Wall St. and 24/7 Tempo. He has held these jobs since 2006.

McIntyre has written thousands of articles for 24/7 Wall St. He is an expert on corporate finance, the automotive industry, media companies and international finance. He has edited articles on national demographics, sports, personal income and travel.

His work has been quoted or mentioned in The New York Times, The Wall Street Journal, Los Angeles Times, The Washington Post, NBC News, Time, The New Yorker, HuffPost USA Today, Business Insider, Yahoo, AOL, MarketWatch, The Atlantic, Bloomberg, New York Post, Chicago Tribune, Forbes, The Guardian and many other major publications. McIntyre has been a guest on CNBC, the BBC and television and radio stations across the country.

A magna cum laude graduate of Harvard College, McIntyre also was president of The Harvard Advocate. Founded in 1866, the Advocate is the oldest college publication in the United States.

TheStreet.com, Comps.com and Edgar Online are some of the public companies for which McIntyre served on the board of directors. He was a Vicinity Corporation board member when the company was sold to Microsoft in 2002. He served on the audit committees of some of these companies.

McIntyre has been the CEO of FutureSource, a provider of trading terminals and news to commodities and futures traders. He was president of Switchboard, the online phone directory company. He served as chairman and CEO of On2 Technologies, the video compression company that provided video compression software for Adobe’s Flash. Google bought On2 in 2009.