TEXT OF INTERVIEW

Scott Jagow: Those lousy subprime investments are taking their toll on even the most conservative and well-respected banks. Today, the Swiss bank UBS reported huge losses and announced a wave of job cuts. UBS will probably see its first quarterly loss in nine years. And this is the first quarterly loss by any top-tier bank because of subprime investments.

Joining us now is our European correspondent, Stephen Beard. Stephen, how serious is the damage for UBS?

Stephen Beard: Well, they’re writing down the mortgage-backed securities by around $3.4 billion. And just to give you an indication of how serious this is, 1,500 jobs are going to go — including the CEO of the investment side of the business.

Jagow: Wow, the CEO is going?

Beard: Yep, the CEO and the chief financial officer.

Jagow: As you said, this is the first one. Are we expecting more of these big European banks to report similar losses and job cuts?

Beard: Well, whether there’s going to be anything bad as this, it’s impossible to say. But European financial markets are certainly bracing themselves for more bad news. I mean, there were rumors last week that Deutsche bank is going to produce some pretty grim figures, too.

Jagow: Yeah, it seems like the European investment banks are being hit worse than the U.S. investment banks. I don’t understand that.

Beard: Well, this is the way it looks. In fact, indeed, some commentators on this side of the Atlantic have been saying, “This shows how clever the Americans have been — off-loading dodgy subprime debt onto European banks and financial institutions.” But this certainly does show how interconnected financial systems are now. The old adage used to be, “When Wall Street sneezes, Europe catches a cold.” Now, it seems when U.S. banks catch cold, some European banks get double pneumonia.

Jagow: Haha. All right, Stephen Beard in London. Thank you.

Beard: OK, Scott.