UBS Shareholders Back Capital Boost, Replace Chairman
By Ernst E. Abegg Associated Press
BASEL, Switzerland, April 23 -- Shareholders of the Swiss bank UBS approved a $15 billion capital increase and replaced the chairman Wednesday in reaction to the fallout it has suffered from its exposure to the U.S. subprime mortgage crisis.
Some shareholders booed and hissed Peter Kurer, the former chief legal counsel named to replace Marcel Ospel as chairman. The company has been forced to write down $37.4 billion of its assets.
It was the second round of capital increases, following a $12 billion infusion approved by investors in February.
"On the whole, the financial markets are also still far from normal, although the evidence suggests that we are gradually reapproaching normality," Ospel told shareholders at the firm's annual meeting.
UBS has been among the hardest-hit of all banks that took on bad debt from the United States.
"It tainted our reputation as a dynamic, innovative yet always risk-conscious financial institution," Ospel acknowledged. "And it also put our clients' trust to a severe test."
Chief executive Marcel Rohner said that the bank had begun to reduce its exposure to risk but that UBS would not spin off its investment bank, blamed for most of the bad investments in U.S. securities. Those investments are now only about a third of what they were at the end of September, he said.
Rohner said the bank has "a very strong capital base, which gives us a very strong foundation for the future, so there's no need to sell assets."
Rohner would not talk about job cuts at UBS, but he said an announcement would be made early next month.
He said an overall loss of nearly $4 billion for 2007 "speaks for itself."
"It is a disastrous result, and it has eroded a great deal of trust," he told shareholders, adding that the bank will "ensure that something like this never happens again."
The losses have grown to about $12 billion net in the first quarter.
Referring to the 50-page report published by the bank on its Web site Monday, Rohner said it "reveals in painfully clear detail what happened and where both we and our systems failed."
"It does not make for pleasant reading, but it does reflect reality," he said.
Rohner told shareholders that one of the biggest mistakes was the failure of oversight. UBS "could not see the forest for the trees," he said.
Kurer said fundamental change is needed in the way UBS looks at risk. He proposed setting up a risk committee that would systematically review bank portfolios.