UBS Cheif Weathers Storm With Shareholders

At an emergency meeting of UBS shareholders on Wednesday, Marcel Ospel - UBS’s long-serving chairman - weathered the storm of outcry and brought the ship around to gain support, albeit disgruntled, to raise SFr19bn ($17.8bn) in new capital.

UBS was the hardest hit in Europe by the U.S. subprime crisis, however Ospel has managed to gain support for his idea to include investors from Singapore and Saudi Arabia. However this means that current investors had to give up cash dividends and had to take an all-share pay-out.

In a much closer vote, Ospel only just convinced investors to not call for a special audit into how exactly the bank lost $18.4bn during the U.S. subprime securities crisis last year.

The audit had been called for by Ethos, a Swiss group who represents many pension funds. Ospel is not taking agitated shareholders lightly now, as the margin between backers of the audit and those with UBS was only 50m votes.

Dominique Biedermann, Ethos’s director, stated he still had great numbers backing his request and that he would now turn to the courts in order to gain the audit. According to Ospel, however, due to UBS’s strong base for economic recovery, there was little chance the legal action would go through.

Though Ospel did evade questions about the bank facing renewed writedowns, as analysts are predicting more instability in the subprime market for the first quarter.

Ospel stated the bank was indeed ready for further shocks, but that it was far too early to speculate about where the market was heading.

UBS will be seeking new senior bankers for their board in a bid to reinforce their top management groups, such as executive board and the board of directors, who they are especially looking to bring in a wider base of knowledge to.

Though many shareholders have called for him to stand down, Ospel has refused, stating it is his duty, as one of the founders of the company, to remain in the front line and to bring the bank back on track and past its current turmoil.

HSH Nordbank, a German public sector bank, has called for compensation for investments they say UBS mismanaged, however UBS stated they have no intention of submitting to the claims. HSH Nordbank has launced a $275m lawsuit in New York against UBS for compensation. UBS have countered with a lawsuit aimed at HSH Nordbank in London.

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