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Banks Take Beating on Stock Market
Russian banks and the British Northern Rock were loss leaders yesterday after a report by UBS of losses in the billion of dollars and warnings by Citibank and Credit Suisse of shrinking profits sent a shockwave through the stock market yesterday. UBS reported losses of 4 billion Swiss francs ($3.4 billion) on fixed income, interest and currency exchange transactions in the third quarter and warned investors that its overall losses may reach 600-800 million Swiss francs ($514-685 million).
The cause of the UBS losses was operations on the U.S. mortgage market, for which the bank's financial director and the head of its investment division have been fired. Another 1500 employees face dismissal before the end of the year as well and UBS may prove to be one of the biggest victims of the American mortgage crisis.
Following on the heels of UBS, Credit Suisse, Switzerland's second largest bank, announced that it expects profits for the third quarter to weigh in somewhere between $890 million and $1.33 billion. Those indicators are lower than in the same period of last year. Nonetheless, the bank avoided large losses because its investments on the American mortgage market are minimal. Citibank reported a 60-percent reduction in profit for the third quarter, compared to last year.
With that news, Citigroup stock lost 1.9 percent of its value on American markets. Deutsche Bank lost 1.32 percent, and Commerzbank lost 0.88 percent. BNP Paribas lost 0.61 percent in France. Northern Rock, which has indisputably suffered most among European banks from the American crisis, lost 15 percent.
Vneshtorgbank lost almost 4 percent on MICEX at one point, but ended the day down 2.26 percent on MICEX and down 1.1 percent on RTS. Sberbank lost 2.4 percent on MICEX and 3.2 percent on RTS. Vozrozhdenie Bank lost 1.95 percent and the Bank of Moscow lost more than 2 percent. The RTS index fell 1.19 percent yesterday.
www.kommersant.com
All the Article in Russian as of Oct. 02, 2007
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