New York: Swiss bank UBS AG, one of the world’s hardest-hit major banks in the global financial crisis, said on Thursday it plans to raise about Swiss francs 3.8 billion by selling stock, and expects to post a second-quarter net loss.
The world’s largest wealth manager by assets is trying to bolster capital and return to profitability after suffering the biggest annual loss in Swiss corporate historyin 2008, hurt by more than $50 billion of write-downs tied significantly to investments in risky US assets.
UBS said it is offering about 293.3 million new shares at a price of Swiss francs 13.00 per share, a 6.9% discount to Thursday’s closing price of 13.97. Shares of UBS fell 5.9% on Thursday before the announcement.
The Zurich-based bank said it expects its tier-1 capital ratio will be higher on 30 June than it was three months earlier, reflecting a reduction of risk-weighted assets. It had reported a ratio of 10.5% as of 31 March.
In a statement, the Swiss government said the government welcomed UBS’ efforts to strength its capital base.
In October, the government had injected Swiss francs 6 billion in UBS, in exchange for mandatory convertible notes that could give it a 9.3% stake.
UBS said most of the expected quarterly loss relates to what it called “own credit” and to previously announced restructuring charges.
It nevertheless said operating results are likely to be better than the first quarter, helped by improved investment banking conditions and lower losses and write-downs.
UBS said it has also suffered net outflows in its three wealth and asset management units so far this quarter.
The bank on 5 May reported a first-quarter net loss of Swiss francs 2 billion.
In its statement, the government agreed to restrictions on its ability to sell shares before 4 August, when the bank expects to report second-quarter results.
It called this limitation “supportive to investors” taking part in the capital-raising.
Analysts believe UBS wants the government to exit its stake quickly to lessen perceived competitive disadvantages. These include a demand that the bank comply earlier than other Swiss rivals with new rules on pay for bankers.