Slender victory for battered UBS chief

by Dave Nixon

Story link: Slender victory for battered UBS chief

Marcel Ospel, UBS’s old hand chairman, on Wednesday experienced one of the most bruising days in his career, as shareholders reluctantly supported steps to raise SFr19bn ($17.8bn) in fresh capital at an epic emergency meeting.

Europe’s principal casualty of the US subprime crisis won support for procedures 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 convinced investors to rebuff 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 insisted on the audit. The comparatively small margin of 50m votes between its backers, and those of the UBS board, was seen as a sturdy warning to Mr Ospel not to take dissenting shareholders for granted.

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

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

Mr Ospel confirmed UBS was searching for senior bankers for its board. Nonetheless, Mr Ospel made lucid he had no plans to step down, despite repeated calls from shareholders for his resignation.

Unconnectedly, the bank rebuffed claims by HSH Nordbank, the German public sector bank, for recompense on investments purportedly mismanaged by UBS. The German bank, one of whose antecedent 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.