Take back what we said in September. This week’s nauseous lurch by UBS highlights the fact that, no matter how cosy they look, even the the big Swiss banks are not immune from globalisation. Credit Suisse are none too happy either, also reporting “adverse results” though nothing as as spectacular as UBS’s hiccup.
The rot began some weeks and months ago with the US subprime mortgage crisis, and the knock-on effects manifested themselves over the pond at the UK’s Northern Rock; the long queues that formed outside its branches were an uncomfortable echo of the 1929 crash.
It wouldn’t be long before the credit crisis spread. On Monday, UBS announced a third quarter loss of 600-80o million Fr - that’s around half a billion dollars - news that sent investors scurrying in panic.
Overall, it was being forced to write off $3.4bn dollars. That’s about the GDP of Laos or Moldova. To be fair, the bank was swift to act, CEO Marcel Rohner immediately slashing jobs and implementing a management shake-up:

Our first quarterly loss in nine years is an unsatisfactory result, especially after such a strong first half. I have therefore taken decisive action to be as transparent as possible. I have also made appropriate senior management changes, and will accelerate already-planned changes to the firm.

Shares have also rallied since Monday, assuaging investors’ initial worries. Some commentators, such as Forbes, even see events in a positive light, suggesting that following the clean-up, now is a great time to buy into UBS. But how the news will affect longer-term confidence remains to be seen.
The whole point of offshore banking, other than the tax savings and high interest rates, is to steer clear of economic tremors in one’s own country. Switzerland may well have a reputation for being insulated from the world outside by impassable mountains and equally inviolable political neutrality, but these losses at UBS are a sharp reminder that no offshore bank can completely hide away from today’s global economy.
Reuters reports here.

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