UBS has not said how much of Evergrande’s debt it holds. Although the Swiss bank appears to have warned its wealthy clients about the housing developer’s risk, the alarm bell didn't ring through to other businesses.
On July 20 last year chief investment officer Mark Haefele put Evergrande on the bank’s «watchlist» after being alarmed by the housing developer’s volatility.
The move set a course into action whereby relationship managers were told to warn clients of the company’s risk and Evergrande securities were removed from rich clients’ portfolios.
Early Warning
UBS analyst reports from as early as January warned that the Chinese developer’s market value could be cut by half. Bloomberg estimated the Swiss bank’s exposure to Evergrande at $275.5 million, an amount which the bank has declined to confirm.
Without saying when exactly, Morningstar reported that UBS acquired Evergrande securities as late as this year. Given that Evergrande securities seem to have been removed from private clients’ portfolios, the debt must be held either within the UBS investment bank or in its asset management division.
Even if UBS clients don’t feel the full impact of the looming Evergrande crash, Haefele may face accusations of not having reacted to internal warnings sooner.
