UBS loses $100m in China

UBS, EUROPE'S largest bank, has lost $100m (pounds 60m) in China as a result of the collapse of Guandong International Trust and Investment Corporation (Gitic), a provincial institution which financed infrastructure projects in southern China with loans from foreign banks.

The loss comes barely a fortnight after the bank's chairman, Mathis Cabiallavetta, and three other board members quit over their role in a $1bn loss-making investment in Long-Term Capital Management, the American hedge fund.

The Chinese Central Bank stepped in to close down Gitic last week after it started experiencing problems servicing its debts. Up to $2bn is owed to foreign banks. The central bank said it would ensure all amounts owing to foreign banks registered with it will be repaid. However, the $100m owed to UBS is not covered by this guarantee.