WILL UBS GO BELLY-UP? AND WHAT WOULD THAT MEAN FOR THE GLOBAL ECONOMY?

UBS Costs to Settle Auction-Rate Probes May Exceed Citigroup's

By Michael McDonald and Karen Freifeld

Aug. 8 (Bloomberg) -- UBS AG, Switzerland's biggest bank, may pay more than Citigroup Inc. or Merrill Lynch & Co. to settle state and federal claims that it fraudulently sold auction-rate securities, a person briefed on the negotiations said.

UBS is close to resolving those claims and may make a promise to retail and institutional clients to buy back the securities, valued at $25 billion by regulators, the person said.

Zurich-based UBS, the target of three state complaints over auction-rate sales, reported a net loss of 25.4 billion Swiss francs ($25.6 billion) in the nine months through March, more than any other bank.