Switzerland's largest bank UBS faced a rocky shareholder meeting yesterday as plans to plug billions of dollars in subprime losses with funds from foreign investors were likely to meet fierce criticism.
UBS' reputation as a key player in Swiss and international banking has taken a battering in recent weeks, with chairman Marcel Ospel coming in for special opprobrium.
Swiss President Pascal Couchepin stoked the flames further on Tuesday, denouncing the bank chairman's "Pharoah-like" salary of 26.6 million Swiss francs (US$24.5 million) in 2006.
"I'm outraged that Marcel Ospel has earned Pharaoh-like salaries for four to five years and that when the bank wobbles, he can keep it all," Couchepin told Swiss weekly magazine Bilan.
"It's not a state matter, but I consider it incredible," the president said.
The meeting "will be a long and difficult one for the management," Credit Suisse banking analyst Christine Schmid said.
Around 5,000 shareholders are expected to attend in the Swiss city of Basel.
UBS has been under increasing fire after posting its first ever full-year loss last year due to US$18 billion in losses in the US housing market.
The bank revealed a net loss of SF4.4 billion last year, compared with a profit of SF12.3 billion in 2006.
In a bid to restore its balance sheet, UBS in December proposed a capital hike of SF19.4 billion funded chiefly by Singapore's state investment arm (GIC) and an unnamed Middle East investor.
GIC said it would inject SF11 billion into UBS, giving it a stake of about 9 percent and making it the largest single shareholder, while the Middle Eastern investor was to put up SF2 billion.
But the proposal has sparked shareholder ire amid fears the deal could put existing investors at a disadvantage.
Pressure is also growing on Ospel, with rumors rife in the Swiss press that UBS is putting out feelers for a possible replacement.
Deutsche Bank head Josef Ackermann, former ABB boss Fred Kindle and Royal Dutch Shell chief financial officer Peter Voser have all been among the names mentioned.
UBS is scheduled to reelect or pick a new chairman during its annual general meeting on April 23.
Couchepin said that his fate "is for the shareholders to decide."
The Ethos Foundation of small shareholders questioned the need for the bank's proposed capital hike, saying the Swiss bank was far from being under-subscribed at present.
"It would not be the end of the world" if shareholders reject the proposal, a spokesperson for the foundation said.
Another shareholder, the Profond foundation, proposed its own capital hike open to existing shareholders that could then be extended to outside investors.
Small shareholders in another association -- Actares -- warned that failure to agree on one or other of the proposals would have "catastrophic" consequences for the bank.
A two-thirds majority was needed to pass the Swiss bank's own proposal, while the Profond hike required an absolute majority to be approved.
Funds research agency Lipper said UBS had seen an 8.4 percent decline in its assets under management in the past six months, while rival Credit Suisse had seen a 1.9 percent fall.
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