Warnings being issued that global 3Q results will suffer
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New Yourk’s Citigroup Inc., the world’s largest financial-services firm, said that its earnings would drop 60 per cent in the third quarter, primarily due to the collapse of the subprime mortgage business. -GETTY
The global credit crunch engulfed banks on both sides of the Atlantic yesterday, as some of the financial sector’s biggest names warned of a negative impact on their third-quarter results.
The biggest news came from the world’s largest wealth manager, Zurich-based UBS AG, which said it would write down $3.4 billion US and post a net loss in the vicinity of $700 million for its third quarter.
The bank attributed the expected loss to deteriorating conditions in the U.S. subprime residential mortgage market.
The bank also said its chief executive, Marcel Rohner, would move to chief executive of its investment banking arm, amid a wider re-organization of senior management and several thousand layoffs.
Credit Suisse, another Swiss bank, said results in its investment-banking and asset-management divisions have been “adversely impacted” by recent turmoil in global debt markets, but that it still expects its third-quarter results to be in the black.
Meanwhile, shares in besieged British lender Northern Rock tumbled up to 17 per cent in yesterday’s trading on fresh fear the bank is now a takeover target and that a buyer would immediately put the bank into administration, leaving shareholders with nothing.
The largest bank in the United States, Citigroup Inc., said that “dislocations in the mortgage-backed securities and credit markets, and deterioration in the consumer credit environment” would hurt its third-quarter results.
Citigroup said it would likely report a decline in net income of around 60 per cent from its third quarter a year ago.