Swiss bank UBS said yesterday it would try to reinforce its capital base by 2.51 billion euros (US$3.51 billion) by placing more than 293 million shares.
The shares will be placed with institutional investors at a price of 13 Swiss francs (US$11.89), raising SF3.8 billion if fully subscribed.
The share issue will “help reinforce confidence in UBS and the place of Swiss finance,” the bank said in a statement.
UBS said it was making the placement now in order to take advantage of market opportunities.
The share placement should allow the bank to raise its ratio of tier 1 core capital to nearly 11.9 percent on a pro forma basis from 10.5 percent as of March 31.
The bank said tier 1 core capital should in any case rise above 11.9 percent because of efforts to reduce risk-weighted assets.
The Swiss government welcomed the UBS share placement and pledged not to sell any shares it is entitled to obtain in UBS before Aug. 4.
Switzerland last year injected SF6 billion, then equivalent to US$5.2 billion, in UBS as part of a massive state aid package to stabilize the bank.
Since June 9, the Swiss government has been able to convert its mandatory convertible notes in UBS into shares.
Despite the pledge not to sell any shares until Aug. 4, the Swiss government said in a statement it could exercise its right to convert the notes into shares at any time and it would make a decision “at the time it wants.”
The bank said it expects to make a loss in the second quarter, the results of which are to be released on Aug. 4, mostly because of loan write downs and restructuring costs already announced.
Operating results should improve from the first quarter, mostly because of improved market conditions for the investment bank and reduced losses and the depreciation of high risk positions taken previously, UBS said.
The leading Swiss bank said there continued to be a net outflow of funds from its wealth and asset-management divisions.
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