PARIS, December 11, 2007 - UBS, SachsenLB, Lloyds TSB, Societe Generale:four European banks revealing delayed strains from the US home-loan crisiswhich is still shaking global finance four months after it broke in August.   On the wider front of short-term interest rates, vital to how banksrefinance their immediate needs, there is renewed tension in the money marketsas the year-end approaches.   The European Central Bank provided an extra 60 billion euros (88 billiondollars) of three-month bank funding on Tuesday at an average rate of 4.88percent and a lowest rate of 4.81 percent, a marked increase from the lastsuch arrangement three weeks ago.   ECB board member Lorenzo Bini Smaghi said on Monday that rate tensionreflected "concern" about year-end cash requirements but was misplaced becausecentral bank policy of "stabilising overnight rates will continue."   UBS and SachsenLB have been hit so hard by their exposure to the so-calledsubprime mortgage market and the financial instruments it generated that theircapital bases have been weakened.   On Monday, UBS, one of the most prestigious names in Swiss and European banking, bit on the bullet of its losses, making a record write-off of about10 billion dollars (6.8 billion euros) and announcing that the hole was beingplugged mainly by the Singapore state investment fund, and also by an unnamedMiddle East investor.   UBS also warned of a loss in the fourth quarter and possibly for the wholeyear, and said that overall it needed 17.1 billion dollars of new capital. Itplans to sell its own shares and to replace a cash dividend with a dividend inshares.   The sudden arrival of the Singapore sovereign wealth fund occurred onlydays after the Organisation for Economic Cooperation and Development hadfocused on the rising importance of such emerging-country funds as corporateinvestors to recycle huge inflows of foreign, mainly dollar, reserves.   Analysts said that by acting radically and quickly, UBS wanted to reassurethat it was putting nasty surprises behind it.   In Germany, the waves from the mortgage shock could have a far biggerimpact than expected on the regional state bank SachsenLB, according to agroup of experts who estimate its exposure at 43 billion euros, theSueddeutsche Zeitung newspaper reported.   It added that the fallout could overwhelm an emergency rescue organised forthe bank after the US crisis emerged.   At leading British bank Lloyds TSB, which puts the subprime damage to itsaccounts at 280 million euros, managing director Eric Daniels said that a"low-risk" strategy had limited fallout, but the last few months had been oneof the most difficult in global finance for a generation.   In France, Societe Generale, another leading European bank, said it wasgoing to bring back into its balance sheet assets covered by a so-calledstructured investment vehicle (SIV) because otherwise it faced a possibleproblem of liquidity after a decision by the credit-rating agency Moody's toput the fund on negative watch.   SIVs contain long-term assets which are often linked to US property assetsnow considered at risk and which are refinanced by the issue of short-termcommercial paper.   The bank, by taking over directly these assets, with a value of 4.3 billioneuros, takes responsibility for refinancing them if investors want their moneyout.   The main objective for Societe Generale is to protect its reputation and"credibility with investors" since it was not contractually obliged toconsolidate a SIV, an analyst at brokers Richelieu Finance, Benoit deBroissia, told AFP.   HSBC bank, a leading European and global operator, has also consolidatedtwo such vehicles into its accounts in this way after injecting 35 billiondollars, and the biggest player in the sector, US bank Citigroup, has beenaffected to the tune of 64.9 billion euros through six vehicles.   Although the effect on bank profits of consolidating such instruments islikely to be small, the change increases the amount of shareholders' fundsimmobilised to underpin lending and is therefore likely to crimp the writingof new loans.   The essence of the mortgage crisis, and the continuing shock waves, is thatvast quantities of home loans issued in the US, on which poor borrowers havedefaulted, had been restructured into complex debt instruments sold on theinternational market.   When the loans turned bad, financiers had great difficulty in identifyingwhere the risks lay in the repackaged paper. Uncertainty restricted the amountof money flowing through short-term markets and is obliging some lenders towrite off large sums while strengthening their capital base.   The repercussions continue to show in the tension in short term moneymarkets and, in the words of the head of leading French insurer AXA, Henri deCastries, the shock waves threaten the wider economy because "less activity bythe banks means less lending, and less lending means less growth."Eve Szeftel(AFP)