The subprime follies continued their global run today as European banking giant UBS AG (NYSE: UBS) reported a record $14 billion loss for it fourth quarter. The loss exceeded analyst estimates by $4 billion. The stock was down over 2% in trading this morning, and over 10% this month.
UBS attributed most of the loss to assets declining in value due to the subprime mortgage situation in the United States. But according to Bloomberg, Citigroup analyst Jeremy Sigee believes that the losses have expanded to "new areas" -- "Value declines have extended beyond just subprime-related exposures, to new areas, for which we do not yet have disclosure on exposure size . . . The recently bolstered capital base remains vulnerable to further erosion."
This is the really troubling part of the subprime credit crisis: no one knows how far the damage goes. And until the accounting is done, the threat of more and growing losses will continue to hang over the markets.
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