Swiss banking giant UBS AG announced that it is taking another US$10 billion in writedowns and taking action to shore up its capital position.

UBS reports that it has revised parameters of the models that are used to estimate lifetime default and resulting losses for subprime mortgage pools. As a result of these revisions, it will write down its U.S. subprime holdings by a further US$10 billion.

The firm has also revised its outlook for its fourth quarter from an overall profit, as anticipated in its announcement of Oct. 30, to a loss. It is also now possible that UBS will record a net loss for the full year 2007.

At the same time, it is adding 19.4 billion Swiss francs of Tier 1 capital. This includes an issue of 13 billion Swiss francs of new capital to two strategic investors: the Government of Singapore Investment Corp. Pte. Ltd. is adding CHF 11 billion, and an undisclosed strategic investor in the Middle East is providing CHF2 billion. After these actions, UBS projects a Tier 1 ratio of above 12%.

“Our losses in the U.S. mortgage securities market are substantial but could have been absorbed by our earnings and capital base,” says Marcel Ospel, chairman of UBS. “Nevertheless, it is important to always maintain a notably strong capital position to support the continued growth of our wealth management business, which is the largest generator of value to UBS shareholders.”

Adds UBS’s CEO, Marcel Rohner, CEO at UBS: “Conditions in the U.S. mortgage and housing markets have continued to deteriorate, and we have updated our loss assumptions to the levels implied by the current distressed market for mortgage securities. In the last several months, continued speculation about the ultimate value of our sub-prime holdings, which remains unknowable, has been distracting. In our judgment these writedowns will create maximum clarity on this issue and will have the effect of substantially eliminating speculation.”

Rohner adds that, in the future, investment banking will be expected to earn an appropriate risk-adjusted return on capital over an entire cycle. “To ensure this happens, we will continue to implement measures to reposition the Investment Bank in line with UBS Group strategy.”