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Financial Planning > Tax Planning > Tax Loss Harvesting

Cushioning the Blow

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Swiss banking and securities giant UBS took the unusual step of pre-announcing full-year and fourth-quarter results on January 30. The Zurich- and Basel-based company says it “will report a net loss attributable to shareholders of approximately [Swiss francs] CHF 4.4 billion for full-year 2007,” or about $4 billion U.S. dollars, and for the fourth quarter, a “net loss attributable to UBS shareholders will be approximately CHF 12.5 billion,” or about $11.4 billion U.S. dollars.

The losses include about “$12 billion (CHF 13.7 billion) in losses on positions related to the US sub-prime mortgage market and approximately USD 2 billion (CHF 2.3 billion) on other positions related to the US residential mortgage market.”

UBS will provide details on February 14, when it expects to announce detailed results for 2007 and the fourth quarter.

Meanwhile, UBS has taken steps to shore up its capital by announcing, on December 27, an “Extraordinary General Meeting of UBS,” scheduled for February 27, in Basel, to approve a private placement offering of CHF 13 billion mandatory convertible 2-year, 9% notes. The Government of Singapore Investment Corporation Pte. Ltd. (GIC), is expected to buy CHF 11 billion of the convertible notes, and an unnamed “strategic investor in the Middle East” is expected to buy the other CHF 2 billion, UBS said in a December 10 announcement. On that day, UBS also announced the “re-sale of 36.4 million treasury shares previously intended to be cancelled,” which it expects to contribute another CHF 2 billion to “BIS Tier 1 capital,” and proposed to replace its cash dividend with a stock dividend. That change in dividend structure, if approved, is expected to “boost Tier 1 capital by CHF 4.4 billion, of which approximately CHF 3.3 billion is a reversal of accrued dividend for the first nine months of the year and the balance is dividend that will now not accrue.” Those measures, if approved, according to UBS, are expected to raise the firm’s “BIS Tier 1 capital ratio” which was 10.6% as of September 30, and an expected 8.8% as of December 31, to above 12%.



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