UBS, which is reeling from huge write-downs linked to the global credit crunch, could split off bad debts into a separate structure to shore up confidence in the Swiss business although such a move will not offer the Swiss bank an easy way out of its problems, say analysts and brokers. The bank, which took $18 billion in write-downs in 2007 due to the US sub-prime mortgage meltdown, will be looking at how it can separate the still-healthy parts of the business from the investment banking side that is most closely involved in trading in assets linked to US sub-prime debt, industry commentators told WealthBriefing. The Swiss bank could, for example, put its portfolio of bad debt into a “workout book” that would be separately reported to avoid contaminating results from the rest of the group, Derek Chambers, equity analyst at Standard & Poor’s Equity Research, said. Such a move will not be the first time UBS has taken this step, he said. "Since problems emerged in the private equity business, UBS has segregated reporting of this in various ways. From 2005 it was put into an industrial holdings segment, allowing the group to report a "financial businesses" result excluding this," Mr Chambers said. However, he pointed out that UBS has announced that it will end this practice when it starts reporting 2008 results because the industrial holdings have been largely run down. But UBS certainly cannot erase bad debts from its books. “They just cannot walk away from it because that would irreparably damage the reputation of the bank; but if they can find buyers for some of these [bad debt] assets, they might want to sell,” Mr Chambers said. Meanwhile, a broker at a UK firm told WealthBriefing that any move to split off bad debt would be difficult to execute: "It is not impossible but in the current environment, pretty tough to structure," said the broker. UBS was not immediately available for comment. According to Financial News analysts have urged UBS to hive off bad or doubtful debt from the rest of UBS’s wealth management and investment banking operations in order to revive the fortunes of the bank. Such a move would create an operational split, leaving investors with new shares in a separate debt work-out business. One benefit is that such a unit could be later sold to investors if investments recover. Shares in UBS have been battered by the credit crunch. On Monday, shares fell to a 12-month low of SFr28.32 ($27.74), before recovering slightly. That figure compares with a 52-week high on 4 June 2007 of SFr80.45.