additional $19 bln on
real estate and related assets on Tuesday, causing a net loss of 12 bln Swiss
francs ($12.03 bln) in the first quarter, and said it would seek 15 bln francs
through a rights issue of shares.
The moves, though expected,
deal a new blow to the world’s largest wealth manager and the European bank
hardest hit so far by the credit crisis, still reeling under the weight of blns
of dollars in bad investments.
The bank’s chairman, Marcel
Ospel, would not seek re-election, UBS said in a statement.
UBS said it would create a
new division to deal with the ailing assets after its mortgage-related
positions deteriorated further in the quarter, in a clear move to draw a line
under the crisis which has shaken investor confidence in the Swiss bank.
While the group was able to
reduce some of its exposure to ailing debt, other potential risks increased and
its overall position in
mortgages deteriorated further, UBS said.
The writedowns come at the
upper end of expectations and on top of $18.4 bln in damage caused by the
subprime crisis last year, which had already forced the bank to ask shareholder
approval for 19 bln francs in capital-raising measures in February.
The creation of a so-called
workout unit, sometimes called a “bad bank,” would allow UBS to
sequester the credit problems in a separate division, permitting management to
focus on the group’s profitable operations and investors to assign value to
them.
The bank needs a sound
capital base to underpin its wealth-management business for rich clients, who
have less tolerance to losing money than institutional investors and are easily
irked by negative headlines. The rights issue is fully underwritten.
Ospel would be succeeded as
chairman by Peter Kurer, currently the bank’s general counsel and a board
member since 2002, UBS said.
“I have always stated
that I ultimately take responsibility for the bank’s situation,” Ospel
said, adding “we have been able to address the firm’s most pressing
problems.”
Analysts had expected the
bank to write down an additional 10-20 bln francs in 2008.
UBS says to cut more
jobs in wake of losses
Swiss bank UBS AG said it
would cut more jobs as it restructured its investment bank in a difficult
environment for the financial industry.
“Clearly the industry
is in a very difficult environment and we have to review the capacity with
which we operate in this environment,” said UBS Chief Executive Marcel
Rohner in a conference call with journalists.
“That’s something
you’d usually do in a difficult environment,” he said. “We will
expect to be more specific with respect to all these measures in due course
over the next weeks to come.”
Earlier on Tuesday, UBS
wrote down an additional $19 bln in assets, causing a net loss of 12 bln Swiss
francs ($12.03 bln) in the first quarter, and said it would seek 15 bln francs
in new capital through a rights issue.
