ZURICH - SHARES in Switzerland's biggest bank UBS extended losses on Monday, as troubles faced by Belgian-Dutch financial group Fortis renewed fears that the Swiss bank could face further massive writedowns.

At 1.56 pm (1156 GMT), UBS was down 10.10 per cent at 18.88 Swiss francs, becoming the biggest loser on the Swiss market, which was also down 2.16 per cent.

Fortis's problems are 'weighing on European banking stocks, leading to fears that the third quarter would be accompanied again by sharp writedowns of assets,' a Zurich-based trader said.

'UBS is much more exposed than Fortis,' added the trader, noting that expectations that the bank would make renewed writedowns and a third recapilisation are running high.

The markets are also asking if UBS would benefit from the massive bailout planned by the US government, he added.

Meanwhile, Bank Helvea's analysts on Monday forecast that UBS was set to write down another 3.0 billion Swiss francs' worth of assets for its third quarter.

However, Helvea added that the forecast was 'particularly uncertain given the far greater size of their exposure than the other banks to US residential market' as well as uncertainty on how UBS could have used hedging to cut their losses.

If successful hedging and trading were not taken into account, Helvea reckons that UBS could write down up to 5.0 billion francs for the quarter.

The governments of Belgium, the Netherlands and Luxembourg came to the rescue of Fortis through a partial nationalisation, while in the United States, Congress is expected to vote on a historic 700 billion dollar bailout of the financial sector.

UBS counts among the banks worst hit by the US subprime loan crisis. It was forced to write down 42.5 billion dollars (S$60.9 billion) in assets since the beginning of the crisis. -- AFP