UBS has appealed to its shareholders to back a capital injection by the Singapore government and a Middle East investor but warned it still cannot predict how the subprime crisis will play out.
UBS's made the appeal in letter to shareholders released on Friday, and it comes after the New York Times reported Merrill Lynch is expected to suffer $15 billion in losses stemming from soured mortgage investments.
The Swiss bank is braced for what looks set to be a stormy shareholder meeting on Feb. 27 when it will seek approval for a capital increase, resulting in the sale of a 9 percent stake to the Singapore government and around 1.5 percent to an unidentified Middle East investor.
UBS said it had decided against undertaking a rights issue to raise capital on the grounds of cost, complication and time.
"During 2008, the environment for financial markets, especially in the U.S., is uncertain, and we need to manage through this period from a position of financial strength," the bank said in a letter to shareholders, dated Jan. 10 and released to media on Friday.
Shares in the bank were 0.9 percent higher.