ZURICH, Oct 6: The head of UBS publicly admitted on Saturday that the giant Swiss bank had underestimated the crisis in the US subprime home loans credit market, and that several top executives paid for that mistake with their jobs.

Marcel Ospel, UBS president, told the Neue Zuercher Zeitung newspaper the bank had over-invested in subprime-related instruments, even though he stressed its size and other activities would help it pull through.

“We poorly evaluated the impact of changing interest rates” in the United States which triggered the problems in that country’s mortgage sector, he said.

“The problems started with the last change in interest rates and were compounded by DRCM,” UBS’s Dillon Read Capital Management hedge fund that had been incorporated into the bank’s investment arm and which was closed in May.

DRCM had racked up 380 million Swiss francs ($325m) in losses in the US high-risk, or subprime, mortgage market before then, making it one of the early victims of the ongoing meltdown.

UBS announced last Monday that it had taken a hit of 4.0bn Swiss francs ($3.4bn) from its worthless subprime investments.

Ospel said two executives linked to the losses, Huw Jenkins, the head of UBS’s investment banking business, and Clive Standish, the bank’s financial director, were removed from their posts.

“When such extraordinary events occur, that can result in personal consequences,” he said.—AFP