SINGAPORE, April 2, 2008 (AFP) - Massive new writedowns announced by Switzerland's UBS are unlikely to shake major investor Singapore's faith in the bank's long-term potential, analysts said Wednesday.

Some said they would not be surprised if the Government of Singapore Investment Corp (GIC) stepped forward with a further capital injection for UBS.

UBS on Tuesday revealed an additional 19 billion US dollars in writedowns, making it the bank worst-hit by a crisis that originated in the United States subprime, or higher-risk, mortgage sector.

The latest writedowns topped the 18.4 billion dollars UBS wrote down in 2007, and which led it to seek an infusion of 11 billion Swiss francs (11.13 billion US dollars) from GIC in December.

Another two billion Swiss francs was to come from an unnamed Middle East investor.

Analysts said that as an investor with a longer-term perspective, GIC would not be too bothered by the latest UBS losses.

'I don't think that's going to be a fundamental problem for GIC,' said David Cohen, director of Asian forecasting with global research house Action Economics.

Ilian Mihov, an economics professor at graduate business school Insead in Singapore, said it would have been a surprise if GIC did not expect writedowns.

'I think the deal that they have is not bad,' he said.

Leon Perera, group managing director of Spire Research and Consulting in Singapore, agreed the latest UBS announcement would not be too troubling for GIC.

But he said GIC would review internally the extent to which it anticipated the UBS losses and whether its investment could have been timed to negotiate better terms.

'The basis of the decision is still sound,' Perera said.

Subprime loans, offered to people with shaky credit, were packaged into securities that were sold to investors around the world. When defaults hit, banks last year began to see billions of dollars in losses on their balance sheets. The lenders had to tighten credit, which crimped consumer and business spending and threatened the overall economy.

Writedowns at UBS now total 37.4 billion dollars and are far greater than those of American banks Citigroup and Merrill Lynch, which also received Singaporean bailouts.

GIC said in January it would invest 6.88 billion US dollars in Citigroup, while Singapore state-linked investment firm Temasek Holdings committed to injecting 4.4 billion dollars into Merrill Lynch.

GIC and Temasek are both sovereign wealth funds -- a form of government-created investment vehicle which has emerged as a potent force on global financial markets.

UBS announced it is seeking to raise another 15 billion Swiss francs through a rights issue, and formed a new unit to hold currently illiquid US real estate assets.

Some analysts said they would not be surprised if GIC provided another capital infusion for UBS.

'You get the right price, it could be a good deal,' said Cohen.

Despite its writedowns, UBS would appeal to investors because it 'has a great network and great skills in asset management,' Mihov said.

GIC was formed in 1981, managing only a few billion dollars of the city-state's foreign reserves. Today it says it manages 'well above' 100 billion dollars, and analysts say the true figure could be 300 billion or more.

A report by Citigroup Global Markets in October listed GIC as among the world's largest sovereign wealth funds.

While GIC would have the capacity to join such a large rights issue, Perera does not expect them to participate because they 'wouldn't want to put too many eggs in one Basketball.'

In response to questions from AFP, GIC said it 'will examine the terms of the rights issue and obtain other necessary information before we decide' whether to participate.

'We recognise that there is impairment in the short-term to our investment in UBS. However, GIC is a long-term investor and we maintain a positive longer-term outlook on the investment,' GIC said.