1st Feb 2008
By Elena Logutenkova and Thomas Mulier
Feb. 1 (Bloomberg) -- UBS AG, Europe's largest bank by assets, said shareholders at its extraordinary general meeting will vote on an alternative proposal to its plan to raise capital from investors in Singapore and the Middle East.
Shareholders will vote on a proposal from Profond, a Swiss pension fund that holds 1 million of the bank's shares, to replenish capital by selling stock to existing investors through a rights offering, the Zurich-based bank said today in a statement.
The bank will also answer questions about its risk controls from the Swiss group Ethos Foundation, which is proposing a special audit of UBS, it said in the agenda for the Feb. 27 meeting.
UBS is seeking shareholders' approval to raise 13 billion Swiss francs ($12 billion) from Government of Singapore Investment Corp. and an unidentified Middle Eastern investor by selling them bonds that will convert into shares to replenish capital after a record loss following $18.4 billion in fixed-income securities writedowns related to the U.S. subprime crisis.
To raise the same amount from existing investors, UBS may need to sell up to 87 percent more new shares than if it sells the convertible bond under the announced terms, UBS said, arguing that the latter option is in shareholders' best interests.
It also said the Swiss Federal Banking Commission has initiated an investigation into reasons that led to the bank's subprime holdings and subsequent writedowns as well as risk control mechanisms. A separate special audit therefore isn't needed, the bank said.
UBS plans to raise a total of about 19.4 billion francs with the measures, which also include the proposal to replace a cash dividend with stock and the resale of 36.4 million treasury shares.
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