UBS, European banks cover losses
Second quarter earnings season starts next week and the next set of numbers from Swiss banking giant UBS may not be as bad as expected. But Stephen Beard reports a massive tax credit is to blame, and no one's celebrating yet.
UBS sign in Geneva, Switzerland (Fabrice Coffrini/AFP/Getty Images)
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Renita Jablonski: In Europe, shares are lower this morning. Second quarter earnings season starts next week and the next set of numbers from Swiss banking giant UBS may not be as bad as expected -- it could break even. But as Stephen Beard reports, no one's celebrating yet.
Stephen Beard: UBS says it just about covered its costs in the second quarter. But that's only because of a massive tax credit. The bank is getting $3 billion worth of tax relief because of its earlier losses.
European banks as a whole are in deep trouble, according to Goldman Sachs. It says they may have to raise up to $140 billion in new capital.
Economist Andrew Hilton says the credit crunch is certainly not over in Europe:
Andrew Hilton: The real economy is only now starting to turn down in Europe, and what we're going to get in Europe is a wave of defaults and much increased loan loss provisions, as has already occurred in the U.S. and to some extent in the U.K.
European banks have already suffered considerably more losses than their U.S. rivals. That's because U.S. banks were so successful in selling subprime securities to Europe.
In London, this is Stephen Beard for Marketplace.
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