Week in review: Ratcheting up the writedowns

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It was Groundhog Day at UBS. The R words (recession and redundancies) loomed large. But Bob Diamond was still sparkly.

UBS illustrated the meaning of déjà vu with the news that it was to announce yet another large writedown. The Swiss bank, which first stunned everyone with the size of its subprime exposures last year, revealed it was writing down another $19bn, taking the total so far to $38bn, according to Bloomberg.

Following the revelations, UBS chairman Marcel Ospel, who'd hitherto clung to power with the tenacity of Robert Mugabe, stepped down, saying he'd taken responsibility for the situation. According to the Telegraph, the Swiss bank then insisted the worst was over (again). And Swiss media disclosed that new chief exec Marcel Rohner intends to 'resize' the business and may well axe another 8,000 people.

UBS investment bankers' woes then worsened on Friday, when former president Luqman Arnold rose from the grave to suggest the investment bank (and source of UBS's woes) be made to go its own way without the more profitable private or business banks, prompting its shares to jump 5%. (By a strange coincidence, John Reed, who helped mastermind the merger between Citicorp and Travelers back in 1998, also chose Friday to manifest himself in the Financial Times, suggesting that Citi was a "sad story" and should be broken up.)

Deutsche Bank had the good fortune to announce a €2.5bn ($4bn) writedown on Monday, which was promptly eclipsed by the much larger one at UBS. The German bank said conditions had become "significantly more challenging during the last few weeks", according to Bloomberg. The Financial Times' Alphaville bloggers pointed out that DB's writedowns were not related to subprime, but rather to "a combination of leveraged loans and loan commitments, commercial real estate, and residential mortgage-backed securities (principally Alt-A)" - suggesting the crunch is spreading.

Financial News highlighted research by Goldman Sachs claiming Citigroup and Merrill will make more writedowns very soon.

Redundancies and recession were both hot topics. In the US, Ben Bernanke admitted that recession might be possible. In the UK, a report from the CBI predicted 11,000 City jobs will be axed by June.

Meanwhile, German site Spiegel said that WestLB, Germany's third largest retail bank, planned to lay off around 1,350 staff - nearly a quarter of its workforce - after the bank announced losses of €1.6bn. CNBC reported that Merrill Lynch plans to cut 10-15% of its workforce (excluding brokers) very quietly some time in May. And Dealbreaker said JPMorgan will begin laying off Bear Stearns' staff next week, but that their payoffs will be surprisingly handsome.

In a sign of the times, City HR, an association frequented by HR professionals in the City, postponed a dinner arranged for next month because "HR departments are extremely busy at present, focusing on internal issues".

Bob Diamond didn't let the internal issues of HR departments get him down. Speaking at a Morgan Stanley conference, the Barclays Capital chief executive was said (by the Financial Times) to be "absolutely bullish" about the future and ready to wrestle market share from less fortunate rivals.

Lehman Brothers perked up. Shares in the bank rose 18% at the start of the week, according to Bloomberg, after it successfully raised $4bn through a convertible bond issue.

Private equity had a goodish week. The New York Times' DealBook blog reported that Blackstone had closed a $10.9bn real estate fund which was "the largest-ever fund of its kind". The Financial Times, however, pointed out that any money now dedicated to private equity is merely the result of last year's schmooze-fest. It also said the industry already has $804bn of uninvested monies waiting in the wings, and that so-called zombie companies, purchased by private equity firms in highly leveraged deals before debt markets turned nasty and now worth less than they owe their creditors, are becoming increasingly common.

Jobs appeared to be on offer in Moscow (albeit only for Russians), where Financial News said a hiring merry-go-round is under way, to the detriment of Deutsche Bank. Failing that, Bloomberg said bankers in London are practising pole dancing moves.