Switzerland moves to bail out banks
Zurich - Switzerland's two leading banks were forced Thursday to seek out new capital injections as the nation became the latest country forced to unveil a bail-out plan in the wake of the global financial crisis.
While UBS AG, the nation's biggest bank, turned to the government for 6 billion Swiss francs (5.2 billion dollars) in additional capital, Credit Suisse Group AG said it was raising 10 billion Swiss francs from private investors and the Qatar Investment Authority.
Credit Suisse's announcement came as Switzerland's second biggest bank posted a 1.3-billion-franc third-quarter loss following further writedowns resulting from the world financial crisis.
The latest quarterly results for Credit Suisse came after the bank turned in a second profit of 1.215 billion francs which helped the bank to recover from 2.148 billion francs of net loss in the first quarter.
But, Credit Suisse chief Brady Dougan said, "unprecedented market disruption in September" had resulted in the group's investment bank unit being hit by losses.
Credit Suisse's investment banking operations posted a 3.2- billion-franc loss as the financial sector experienced "extraordinary changes to the competitive landscape," said Dougan.
Announcing the government bail-out, UBS said the capital injection from the government would help create a special fund to cover toxic assets including those linked to the US subprime mortgage market crisis.
The fund, where up to 60 billion dollars of UBS's toxic assets would be parked, was to be underpinned by the Swiss government as well as the nation's central bank.
Zurich-based UBS chief Max Rohner said the move would help the bank to cut risks in an "extremely difficult market environment."
UBS, which has emerged as one of Europe's major casualties of the subprime crisis that first began to rattle financial markets about 15 months ago, also reported Thursday that it had run up "modest" third- quarter earnings of 296 million francs.
However, UBS said its top-end customers had withdrawn 49.3 billion francs from the bank's key wealth management business during the third quarter. (dpa)