http://www.reuters.com/article/marketsNews/idINLK25275620090220?rpc=44 UPDATE 3-Swiss bank shares tumble as UBS tax probe widens ZURICH/GENEVA, Feb 20 (Reuters) - Shares in UBS (UBSN.VX) (UBS.N) hit record lows on Friday as Swiss bank shares reeled on concern a widening U.S. tax probe will weaken Switzerland's strict privacy rules and damage the country's wealth management industry. UBS, the world's biggest banker to the rich, led the fall in Swiss bank shares. It was down 13.5 percent at 1255 GMT after hitting a fresh all-time low at 10.54 Swiss francs. Shares in bank rivals Credit Suisse (CSGN.VX) and Julius Baer (BAER.VX), both large players in the private banking industry that has thrived thanks to strict Swiss bank secrecy laws, were down 9 and 10 percent respectively.
Doubtful. UBS assets are four times the GDP of Switzerland (i.e., the equivalent of the US trying to bailout a $60 trillion bank). The best the Swiss could hope for is to split the bank, save the domestic sliver, and let the massive international side go. Nor is UBS an isolated example of a massive bank in a tiny country. Lots of European banks are larger than their hosts. These European banks have substantial holdings in Eastern Europe that are effectively subprime ARMs. http://seekingalpha.com/article/120721-european-banks-too-big-to-rescue
"Effectively subprime" ? I am not aware of European banks practicing lending policies like in U.S. Taking into consideration currency movements in the last week one might observe challenging times for borrowers, but I do not think these borrowers are to be named "subprime".
Possibly - however currencies are just a big "ugly contest". How about just shorting UBS (and CS and Julius Baer) instead?
Risk reward is a bit too poor, I got too many of these shorts that I'm trying to ride to 0, I think they are all heavly correlated. The CHF in the other hand is still near highs vs tons of currencies
Good point about the correlation. Sometimes it's hard to tell if XYZ financial is going down because it specifically is an insolvent company, or simply because it's a financial company.