- 10 December 2007 - Government of Singapore Investment Corporation (GIC) pumps US$10 billion into UBS amid significant writedowns related to its subprime banking exposure in the United States.
- 1 April 2008 - UBS announces a further writedown of US$19 billion due to the abovementioned exposure and seeks a further US$15 billion of capital infusion.
Question: Did our government's investment vehicle made the right choice when it saw UBS's initial capital plea as a chance to get a 9% stake in the bank? Or was it betting on the wrong horse? Or is this the lowest it can go before bouncing back and proving GIC's investment choice correct?
A bit scary considering that GIC is investing Singapore's vast reserves. But then again, US$10 billion is a drop in the bowl when our official reserves is US$172 billion as of February this year, making us number 8 in the world.
Let's hope UBS doesn't go under and make GIC's investment a fiasco. However I do wonder whether the asset managers were aware that there could be further writedowns or were certain facts either withheld by UBS or were totally unknown by them at that time. In which case, how diligent was GIC's due diligence?
I guess this should provide our MPs new materials to base their questions on when parliament next sits on 21 April 2008.
And in other news, an outline of a deal has almost been reached for Zimbabwe's President Robert Mugabe to step down. The opposition says it won Saturday's general elections.
Labels: banking-finance, international, singapore
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As for the MPs asking questions, I think that they can save the saliva. The answer will be a typical non-answer.