August 15, 2007 (LPAC) -- The Swiss bank, UBS, the world's largest wealth manager and one of the top 10 banks in the mortgage sector, is in trouble, as coverage of yesterday's press conference by the new CEO Marcel Rohner reports.

Under the headline "UBS Alert Sparks Sell-off in Markets," the London Financial Times reports that Rohner said "it is clear that it will be a while until the crisis plays through fully," implying that the worst is yet to come.

First quarter 2007 losses from the bank's Dillon Read Capital Management hedge fund were larger than originally admitted by the previous CEO Peter Wuffli, the Swiss financial daily Neue Zuercher Zeitung reports. Direct losses of 229 million Swiss francs caused a drop of 80 percent in the Global Asset Management department of UBS. The losses also caused withdrawals by foreign investors, burdening UBS with another 1.5 billion francs.

Rohner hinted that he expects second quarter 2007 performance to be worse than the same period in 2006. Losses incurred so far could be compensated by the sale of the UBS's share in Julius Baer Bank.

Even these rather vague admissions of problems set aside UBS from big German banks, such as Deutsche Bank, which has so far refused to comment on growing rumors that it is covering up its role in the troubles at Germany's industry bank, IKB, and other trouble spots, and has also refused to comment on exposures in the U.S. mortgage market.

Rumors are now circulating that Deutsche Bank and Citibank together set aside 6.5 billion euros, to help stabilize the failing Rhineland Funding, the Delaware-based money fund, whose problems thratened to bring down IKB. It is also now hinted that Deutsche Bank used IKB's Rhineland Funding as its own vehicle for asset-assessment on the U.S. mortgage market, indicating that its role in the IKB failure was much more prominent than previously admitted.