Swiss banking giant UBS (UBS) is the most mauled European financial player in the global credit crisis. The bank took $18.4 billion in write-offs last year from subprime mortgage securities gone bad—and it still has at least an $80 billion exposure to risky securities on its books. Last December, UBS had to line up a $12 billion capital injection from the Government of Singapore Investment Corp. and an unidentified Middle Eastern investor. And future writedowns at UBS are probable. "We don't have confidence the worst is over," says Huw van Steenis, a London-based analyst with Morgan Stanley.
It's all a surprising twist for a once-conservative lender and dominant force in private banking that has some $2 trillion in assets under management. Now the unfolding drama, which has already cost Chief Executive Peter A. Wuffli his job, clouds the bank's future. The U.S. Securities & Exchange Commission has launched a probe into whether UBS properly valued its subprime securities, a bank spokesman confirmed.