UBS said, on Thursday, the newly unveiled exposure, announced together with full-year and fourth-quarter results, was to so-called Alt-A mortgages, which are of higher quality than subprime loans but also considered risky.

Global crunch

UBS has taken about $18 billion in write-downs on its exposure to US subprime mortgages, which at the end of December amounted to a net $27.594 billion, making it one of the biggest casualties of the global credit crunch.

UBS Chief Executive Officer Marcel Rohner said he could not say if would return to profit in the first quarter, after posting a fourth-quarter loss roughly in line with guidance it gave in a profit warning last month. Analysts said UBS could report more losses in the first quarter on subprime exposure it has hived off into a special “workout portfolio” in order to sell the securities.

“There will be a separate workout book, and that will presumably be separately reported. I would imagine that would make a loss in the first quarter,” said Derek Chambers at Standard & Poor’s Equity Research.

UBS Chief Financial Officer Marco Suter also said Singapore and an unnamed Middle East investor, who agreed in December to provide a 13 billion Swiss franc capital injection, were still committed to a mandatory convertible note, contrary to rumours that Singapore was having second thoughts. “This is a committed transaction,” Mr Suter told Reuters. He said the bank could improve its capital ratios without having to raise additional equity by cutting risk-weighted assets or issuing hybrid debt instruments. He also said liquidity was returning to credit markets, which was snarled up by the global credit crisis.