Swiss bank UBS AG said yesterday it expected to post first quarter net losses of 12 billion Swiss francs (US$12.1 billion) and would seek SF15 billion in new capital.
Switzerland's largest bank, which has been hard hit by the US subprime mortgage crisis, also said it sees losses and writedowns of approximately US$19 billion on US real estate and related credit positions.
Chairman Marcel Ospel will not seek re-election at the April 23 annual general assembly of shareholders and will be succeeded by general counsel Peter Kurer the bank said in a statement.
The bank said its move to raise capital through a rights issue would be fully underwritten by four leading international banks and would enable it to remain "one of the world's strongest and best capitalized banks."
"In the first quarter, UBS substantially reduced its real estate related positions through both valuation adjustments and significant disposals," the bank said.
It said it would create a new unit to "hold certain currently illiquid US real estate assets."
"UBS is confident that these measures will deal effectively with the firm's real estate exposures and allow the bank to focus on strengthening its core operations," the statement said.
Chief executive Marcel Rohner said, "We believe this capital increase and the creation of a vehicle to separate problem assets from the remainder of our businesses will allow us to return to sustainable value creation over time."
He said profits from most of the bank's businesses "remained acceptable in challenging conditions" during the first quarter.
"We have made further prompt writedowns and sales of our impaired US real estate-related positions," Rohner said. "We have reduced risk weighted assets and implemented measures to control costs and strengthen the structure of the firm."
However, he said, UBS wants to avoid selling at "severely distressed levels."
"With these measures we have created the basis to weather one of the most difficult periods in the history of the industry," Rohner said.
Earlier this year UBS posted a SF12.45 billion loss for the fourth quarter of last year after writing down SF15.6 billion in bad investments from US subprime mortgages and said it expected this year to be another difficult year.
The bank also had posted a net loss of SF4.38 billion for the full year, its first annual closing in the red.
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