Global Business

Holders Resoundingly OK $12B Infusion at UBS

Vote allows Swiss giant to shore itself up against massive subprime-related losses.
Stephen TaubFebruary 27, 2008

Shareholders helped Swiss bank UBS take a giant step toward recapitalizing and strengthening its balance sheet, as they approved a $12.14 billion emergency capital injection through the placement of convertible bonds.

The bank sought to issue mandatory convertible bonds to the Singapore Government Investment Corp. (GIC) and to an unidentified Middle East investor, according to Reuters, which reported on the shareholder action. The Basel-based banking behemoth earlier posted $18 billion in write-downs from the subprime mortgage crisis.

Reuters noted that some shareholders had opposed the issuance of the convertible bonds, favoring instead a rights issue by the bank. There also have been calls for chairman Marcel Ospel to step down.

However, according to the Associated Press, Ospel told an extraordinary shareholders meeting in Basel: “I would never thoughtlessly relinquish my responsibility, and I intend to ensure that UBS gets back on the road to success.”

The AP also reported that Ospel had scored another victory when hodlers rejected a special audit of the bank’s losses. Investors holding 363 million shares voted against the special audit, versus a 314-million share vote in favor.

Reuters also noted that shareholder activists agreed to hold off on a motion demanding a special audit of UBS’s financials for the past year, adding that the board opposes such a move.