UBS shareholders approve Singapore GIC’s $14b capital injection
Over two-thirds vote in favour of proposal; chairman, board castigated
By Grace Ng, Finance Correspondent
TENSE MEETING: After seven long hours, some 6,500 UBS shareholders voted in favour of the proposed capital injection. — PHOTO: REUTERS
UBS shareholders approved last night an 11 billion Swiss franc (S$14.16 billion) injection by the Government of Singapore Investment Corp (GIC) into the Swiss banking giant following a tempestuous marathon meeting.
Those who attended the emergency meeting in Basel, Switzerland, fumed over the billions of dollars UBS lost as a result of its exposure to the United States sub-prime mortgage crisis.
But seven tense hours after the meeting started at 5pm Singapore time, some 6,500 shareholders present voted overwhelmingly in favour of the proposed capital injection totalling 13 billion Swiss francs by GIC and a Middle Eastern investor.
About 599 million votes were in favour, far exceeding a two-thirds majority of 458 million votes needed for the proposal to pass.
They also approved the bank’s proposal to replace a cash dividend with a share dividend, allowing the bank to raise 4.4 billion Swiss francs and fortify its balance sheet.
Many shareholders arrived at the meeting on a train called the UBS Special, put on especially for the event.
Before the vote, livid shareholders castigated UBS chairman Marcel Ospel over the bank’s hefty 20 billion Swiss francs’ worth of charges related to investments in US sub-prime mortgages.
The write-downs dealt UBS its first full-year loss in over a decade.
One furious shareholder even tried to storm the stage, where the UBS board was seated, The Associated Press reported.
‘I think it would be better if the whole board would be replaced and that their pensions be withdrawn,’ said an angry Swiss shareholder.
Another said: ‘A bank is not a casino. You’ve placed high bets and you’ve lost a lot.’
The meeting at St Jakob’s Hall, a sports arena and concert hall in Basel, started 15 minutes late, ‘contradicting Switzerland’s reputation for rigorous punctuality’, to accommodate ‘extra numbers in two overspill halls’, reported the Financial Times.
Mr Ospel kicked off the meeting with an impassioned plea to shareholders to back injections of 11 billion Swiss francs from GIC and another two billion Swiss francs from an unidentified Middle Eastern investor.
Some shareholders, such as Swiss groups Actares and pension fund Profond, earlier called for a rejection of capital infusion, saying it was unfair that they could not participate in the convertible bond issue. They instead sought a rights issue.
Mr Ospel insisted the capital infusion was ‘absolutely necessary’ to help UBS get back on its feet.
He also turned down calls for his resignation, saying he would not ‘thoughtlessly relinquish” his duties.
The current crisis is the most difficult since the 1929 market crash, and UBS ‘judged certain markets wrongly’, said Mr Ospel.
‘We subsequently noticed this error, but due to the rapid evolution of events were unable to react in time,’ he said.
Still, Mr Ospel, 58, who helped push a merger that created UBS 10 years ago, said it was his ’supreme duty’ as co-architect of UBS to ’stay on the front lines’ and ensure the bank ‘gets back on the road to success’.
He also said UBS was looking for senior bankers to join its board.
UBS is reportedly having difficulties finding anyone willing - or brave enough - to take the hot seat Mr Ospel has occupied for seven years.
More than 50 shareholders rose to speak - limited to five minutes each.
Some shareholders expressed fears that UBS could face further hefty write-downs this year.
Mr Ospel told shareholders: ‘I fully understand, and we’re likely to hear it often today, that you are extremely disappointed by what has happened.’
Source : Straits Times - 28 Feb 2008
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