• 
• 

Published on April 2, 2008

UBS, battered by write-downs from the collapse of the US sub-prime mortgage market, reported a 12-billion-franc (Bt376 billion) quarterly loss and said chairman Marcel Ospel would step down.

Bloomberg reported the bank would seek 15 billion francs in a rights offer to replenish capital on top of 13 billion francs raised from investors in Singapore and the Middle East. UBS will write down US$19 billion (Bt598 billion) worth of debt securities, bringing the total to almost $38 billion since last year's third quarter. Zurich-based UBS yesterday also said it would cut jobs at the investment bank.

Ospel, 58, who led the creation of UBS in a merger a decade ago, will be replaced by 58-year-old general counsel Peter Kurer. Deutsche Bank yesterday said market conditions had become "significantly more challenging" in recent weeks, after rising US mortgage defaults caused about $230 billion in credit losses and write-downs at financial companies. UBS rose as much as 10 per cent in Swiss trading on optimism that Switzerland's largest bank would recover from its sub-prime losses.

"Behind closed doors, they have been cleaning up very swiftly, and the capital increase will put them back on a solid foundation," said Joerg de Vries-Hippen, who oversees about $26 billion, including UBS shares, as chief investment officer for European stocks at Allianz Global Investors in Frankfurt, Germany.

"Still, it will take years to repair the bank's reputation."

The first-quarter write-down is greater than the $11 billion estimated by analysts at Merrill Lynch and Oppenheimer.

The bank's tier-1 capital ratio, a key measure of solvency, will be about 10.7 per cent after the rights offering is completed, UBS said. Without the capital increase, the ratio would have fallen to about 7 per cent.

Losses have already cost the jobs of former CEO Peter Wuffli, finance chief Clive Standish and investment-banking head Huw Jenkins. Ospel, who was supposed to stand for re-election at the shareholders' meeting on April 23 for a shortened, one-year term, helped arrange the previous capital increase.

"I ultimately take responsibility for the bank's situation," Ospel said in a statement. "With the measures that we have already taken, the proposals we are submitting to the annual general meeting and the processes we have put in place to deal with lessons learned, I believe that I have made all the necessary contributions."