A signal from UBS: Banking crisis is not over

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The world's largest money center banks were all caught up in the mortgage-backed securities net. They also all have some exposure to real estate, consumer, and commercial debt. That means that the results of one international bank are not likely to be entirely different from any other.

UBS (UBS) today said it would lay-off 8,700 people and take a $1.8 billion loss. That is some indication that the big U.S. banks are not out of the woods.

According toThe Wall Street Journal, "The Zurich-based bank said its net loss for the first three months was caused by roughly 3.9 billion francs in losses on illiquid securities, expenses for credit losses, and lower value of assets on the remaining positions transferred to the Swiss National Bank as part of a government shore-up."

After an amazing run up in bank shares, primarily due to optimism that Citigroup (C) may have had a good first quarter and that Wells Fargo (WFC) did, stocks in many large U.S. banks have started to sell off. Investors are concerned that the results of some of the "stress tests" of the firms will indicate that many will have to raise more capital and probably further dilute common shareholders. The UBS data is not good for bank bulls and could trigger a wider sell-off of U.S. financial stocks.

A little over a week ago, it looks like the American financial industry was close to the end of its year-long nightmare. Now, Wall Street is not so sure.

Douglas A. McIntyre is an editor at 24/7 Wall St.

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