Swiss bank regulator hopes worst behind UBS

ZURICH (Reuters) - Beleaguered Swiss bank UBS (UBSN.VX) might be back on a more stable track after billions of dollars in writedowns and capital hikes, the president of the Swiss banking regulator EBK was quoted as saying on Sunday.

"The dimension of the recent losses is extraordinary," the president of the Banking Commission, Eugen Haltiner, told the NZZ am Sonntag newspaper in an interview when asked whether the worst was behind UBS.

"But these can be absorbed with a timely re-capitalisation. The bank will be well capitalised again and has written down to a degree that we can hope for a stabilisation," he said.

On Tuesday, UBS doubled its writedowns from the subprime crisis to around $37 billion, dumped its chairman and asked shareholders for more emergency capital in a second dramatic attempt to reverse its fortunes.

But Haltiner warned that the credit crisis was not over as there were no signs of stabilisation of the U.S. real estate market, where the crisis originated.

"We expect the situation in markets to remain difficult over the coming quarters," he told the NZZ am Sonntag.

In a separate interview, Swiss Finance Minister Hans-Rudolf Merz also voiced cautious optimism on the bank's future though he also warned against giving an all clear.

When asked whether he expected further losses at UBS, Merz told Swiss paper Sonntag: "The financial market crisis is not over. I cannot answer and I want not to answer this question."

"I think it's positive that the stock market has reacted relatively positively to the measures UBS has announced this week," he said in the interview.