Thursday, January 17, 2008

Merrill write-downs total $16.4B, WSJ says

Merrill Lynch's 4Q07 write-offs have been reported at $11.5 billion.

But there's more. The WSJ reports a total of $16.7 billion in write-downs.

The Journal breaks it down this way:

• $9.9B on CDOs

• $1.6B on subprime (in the trading unit)

• $3.1B on exposure to bond insurer

• $0.4B on exposure to Alt-A (in trading unit)

• $0.5B on exposure to residential mortgages outside the U.S.

• $0.23B on exposure to commercial real estate

• $0.126B on exposure to leveraged loans

• $0.869B on exposure to subprime, Alt-A and other elements in the investment portfolios of Merrill's U.S. banks

UBS ends offshore banking for U.S. clients

UBS has decided to wind down its Switzerland-based private banking services for U.S. clients, the Financial Times reports. Compliance concerns (including money laundering and tax evasion) drove the move, apparently.

Blogger's note: Globalization has been criticized as possibly letting financial services firms arbitrage regulators by seeking out the weakest oversight. This move by UBS strikes me as being the opposite—the bank has been forced to end a questionable practice or face reputational risk. It can't take that risk—it has too much at stake worldwide.