Swiss Bank Regulator To Investigate UBS On Huge Mortgage Losses

Geneva, Switzerland (AHN) - Swiss banking giant UBS is set to be investigated by the Switzerland's Federal Banking Commission (EBK) on how it lost billions in the global credit crisis.

UBS, recognized as the banking sector's worst victims of the mortgage crunch, has written off about $14 billion since the crisis early this year.

Swiss weekly Sonntag.CH reported the Swiss regulator "will investigate how these enormous writedowns" occurred and determine "who was responsible" for these losses.

EBK spokesman Alain Bichsel added the probe will kick off once the financial meltdown eases.

UBS, the world's largest wealth manager, said it will cooperate with any investigation.

The giant Swiss financial institution has scrapped this year's dividend and sold some shares held by the bank. It recently sold new shares to Singapore and Saudi Arabia to bolster is balance sheet.

EBK is also pressuring UBS to increase its capital base to overcome the credit crisis as soon as possible.

Aside from UBS, many major banks were badly hit by the U.S. mortgage woes. Sub-prime mortgages were considered relatively safe investments before markets for these instruments dried up in the summer.

U.S. banks scrapped on Friday the $75-billion "superfund" proposed to support the finance sector badly hit by the mortgage credit crisis. The consortium which includes Bank of America, Citigroup, and JPMorgan Chase said the bailout fund for structured investment vehicles (SIVs) is "not needed at this time."

The banks, however, insisted that they could reactivate the plans, should conditions worsen.