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How To Make Money From Losing Money Ubs Edition

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by Felix Salmon
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Apr 01 2008 12:00am EDT

How to Make Money from Losing Money, UBS Edition

UBS is the latest bank to see its share price rise in the wake of an absolutely enormous write-down. The $19 billion write-down announced today almost doubles the write-downs taken since the third quarter of 2007, and, in a move reminiscent of Sandy Weill being replaced by Chuck Prince, chairman Marcel Ospel is retiring to make way for his general counsel.

So what does the stock market like here? Frankly I'm not sure. A Sfr15 billion rights issue will do wonders for UBS's battered balance sheet, but it will also dilute existing shareholders enormously. My feeling is that investors are rewarding UBS for getting out of its ostrich pose. But if new chairman Peter Kurer doesn't start showing some impressive results sharpish, I suspect that the market will prove to have very little patience for him.

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