Embattled UBS Wraps Up Bumper Rights Issue

UBS has wrapped up a 16 billion franc ($15.4 billion) rights issue, the Swiss bank's second effort to resuscitate finances that have been ravaged by the global markets crisis.


It is the latest in a line of major banks including Britain's Royal Bank of Scotland and HBOS and France's Credit Agricole to go cap in hand to shareholders.

In total, European banks are raising more than $40 billion from shell-shocked investors.

UBS said on Friday 99.4 percent of the issue was taken up but one analyst pointed to what he said was UBS's weak stock performance during the rights trading.

"It has been weak ever since they announced the rights issue," said Peter Thorne, an analyst with Helvea. "UBS hasn't got a lot of fans."

The episode is particularly poignant for UBS.

Once a rock of Swiss financial prowess, it is now Europe's biggest loser in the global financial turmoil with writedowns twice those of Royal Bank of Scotland.

And there are signs that its prized wealthy clientele are growing nervous - money flows into its wealth management business slowed to a trickle in the first three months of the year.

Investors found it hard to muster enthusiasm for extra stock in a bank which has burned its way through $37 billion in writedowns on dud investments.

The subscription price for the new shares was set at 21 francs.

Since the start of the rights trading, the bank's shares have tumbled by about 17 percent and at roughly 24 euros per share.

They are worth about a third of what they were a year ago.

The capital hike will see a shift in UBS's shareholder base away from traditional fund investors in London, for example, towards hedge funds or the oil-rich Middle East, bankers and analysts have said.

This is the second time that UBS has had to fatten its capital base.

In February, shareholders grudgingly approved an injection of 13 billion Swiss francs from Singapore and an unnamed Middle East investor.

Shareholders have also had to take on a series of other measures such as UBS paying a dividend in stock rather than cash to keep its head above water.

Appetite for fresh shares this time around has been sapped by other share issues.

Royal Bank of Scotland, for example, squeezed investors for about $24 billion.

UBS shares closed 5.3 percent higher Friday at 25.58 euros per share.