UBS failed to calm investor fears about possible further writedowns on Tuesday, dishing out instead a restructuring of top management and sending the shares to a fresh 10-year low.
UBS, Europe's biggest casualty of the credit crisis and under fire from investors for shoddy corporate governance, said it would dismantle the office of chairman, a key demand of one of its top shareholders, Olivant.
UBS stock -- also under pressure after Merrill Lynch removed it from a list of preferred stocks -- fell 5.3 percent to 20.30 francs, extending Monday's losses below the 21-franc price on its $15.5 billion deeply discounted rights issue.
Investors are worried not only possible about further losses on investments but also that UBS may ask shareholders for more cash.
"There is talk that UBS will propose another capital hike," one Zurich-based trader said.
UBS is under pressure from the Swiss financial watchdog and investors to overhaul its business after more than $37 billion in writedowns during the global credit turmoil.
"Apparently, UBS blames its corporate governance -- with a chairman who also had executive power and no real supervisory function -- for its subprime debacle," said Landsbanki Kepler analyst Dirk Becker.
"With its new governance, it wants to ensure that such an accident can never happen again. However, as this won't help to get it out of the current crisis, we regard this announcement as a nonevent," Becker said.
Recommendations of a governance committee -- including strengthening the board's overseeing role and a clear separation of the responsibilities of the board of directors and executive management -- would be implemented immediately, UBS said.
Olivant, which had criticised the chairman's office for having too much sway over executive management, welcomed the changes.
Four board members will resign and replacements will be elected at an extraordinary general meeting planned for October 2, UBS said.
Sergio Marchionne, chief executive of Italian automaker Fiat SpA, will fill a new post as senior independent director, and continue as non-executive vice-chairman of UBS.
The board and its strategy committee are continuing their review of the strategic positioning of the bank and its businesses, UBS said.