Narrow victory for battered UBS chief by Finance News Bulletin

Published: 10/04/08

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Marcel Ospel, UBS’s veteran chairman, on Wednesday suffered one of the most bruising days in his career, as shareholders grudgingly supported steps to raise SFr19bn ($17.8bn) in fresh capital at a marathon emergency meeting.

Europe’s biggest casualty of the US subprime crisis won support for plans to bring in Singapore and Saudi Arabia as strategic investors and scrap its 2007 cash dividend for an all-share pay-out to save cash.

But in a much closer vote, Mr Ospel only narrowly persuaded investors to reject a call for a special audit into how the bank lost $18.4bn on US subprime securities last year.

Ethos, the Swiss group representing many regional pension funds, had demanded the audit. The relatively small margin of 50m votes between its backers, and those of the UBS board, was seen as a strong warning to Mr Ospel not to take dissident shareholders for granted.

Claiming “overwhelming support”, Dominique Biedermann, Ethos’s director, said he would now turn to the courts to ensure the audit took place. Mr Ospel played down the risk of legal challenges, arguing that UBS had laid the foundations for a strong recovery.

However, he dodged the question of whether the bank might face big new writedowns, as feared by many analysts after further weakness in the subprime market in the first quarter.

“We would be prepared for further shocks. But it’s too early to speculate on what might come in the months and quarters ahead,” he said at a news conference after the meeting.

Mr Ospel confirmed UBS was looking for senior bankers for its board. “We will continue to strengthen our top management bodies such as the board of directors and the executive board with new members...On the board of directors we want especially to broaden expertise in banking,” he said.

However, Mr Ospel made clear he had no plans to step down, in spite of repeated calls from shareholders for his resignation.

“As a co-architect of this company...I believe it is my supreme duty to be there on the front lines, helping the bank tackle and overcome its current troubles,” he said.

Separately, the bank rebuffed claims by HSH Nordbank, the German public sector bank, for compensation on investments allegedly mismanaged by UBS. The German bank, one of whose predecessor institutions bought a $500m investment portfolio from UBS, this week launched a $275m suit for compensation in New York.

UBS has rejected the claim and initiated its own suit against HSH Nordbank in London. Copyright The Financial Times Limited 2008

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