Ospel to leave after fresh $19bn writedown at UBS
By Haig Simonian in Zurich
Financial Times
Published: April 1 2008 07:18
Marcel Ospel bowed to intense pressure and said he would not seek
re-election as chairman of UBS, as Europeıs biggest casualty of the
subprime
crisis announced a further massive loss and its second capital increase in
two months.
Mr Ospel, who has faced mounting criticism over his and the boardıs
failure
to identify the bankıs huge exposure and its subsequent handling of the
crisis, will be replaced by Peter Kurer, UBSıs general counsel.
The nomination of Mr Kurer, best known in Switzerland for his role during
the collapse of Swissair, the former national airline, indicates a failure
to find a more suitable replacement, in spite of intensive contacts with
top
bankers around the world.
Mr Kurerıs surprise nomination also suggests Mr Ospel had hoped to soldier
on. In February, Mr Ospel made an initial, and apparently successful,
attempt to deflect criticism by proposing that board membersı mandates be
cut to 12 months from three years as before. Mr Kurer will be formally
confirmed at the bankıs shareholdersı meeting on April 23.
³I have always stated that I ultimately take responsibility for the bankıs
situation², said Mr Ospel in a statement. ³We have worked very hard and
have
been able to address the firmıs most pressing problems.²
The decision came as UBS said it expected to lose a net SFr12bn in the
first
quarter on the back of a further $19bn writedown on its US holdings. To
maintain the high capital ratios considered essential for the groupıs blue
chip private banking business, it will also make a SFr15bn rights issue.
The
rights issue will be fully underwritten by JP Morgan, Morgan Stanley, BNP
Paribas and Goldman Sachs.
The moves will be accompanied by the creation of a new vehicle to manage
UBSıs troubled US mortgage-related holdings, following the earlier
segregation of many such assets into a ³work out unit.²
In its profits warning, the bank forecast pre-tax earnings of about
SFr2.1bn
in wealth management and a decline in pre-tax earnings to about SFr300m in
asset management, its two other divisions apart from investment banking,
which expects a SFr18bn pre-tax loss. UBS said its exposure to US
residential subprime mortgage related positions fell to about $15bn from
$27.6bn at the end of December, while exposure to slightly higher rated so
called Alt-A positions fell to $16bn from $26.6bn through a mixture of
further writedowns and unspecified asset sales. While other risk positions
were also reduced, holdings of auction rate certificates rose to $11bn
from
$5.9bn.
Crucially, the bank said it expected to re****t clients had continued to
pump
in new money into its powerhouse wealth management business, in spite of
severe fears about withdrawals following adverse publicity and the blow to
its reputation. However, UBS predicted net outflows on its institutional
asset management side.
UBS shares, which have fallen 83 per cent in the last twelve months, were
down 4.7 per cent in pre-market trading at SFr27.50.
http://www.ft.com/cms/s/0/38198c72-ffae-11dc-825a-000077b07658.html
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