UBS Surges 10 on $15 B Offering

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Earnings Analysis:

UBS Surges 10% on $15 B Offering

Author: 123jump.com Staff
123jump.com
Last Update: 8:20 AM EDT April 01 2008

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The second largest Swiss bank, UBS reported a sharply higher loss in the first quarter and proposed to raise $15 billion in rights offering. The pre-announced loss was larger than what market had expected. The losses and write-down in real estate loans amounted to $19 billion. Separately UBS announced that its long time chairman Marcel Ospel has resigned and is replaced by its general counsel. UBS also confirmed that it is losing clients and assets in its wealth management unit.

Shareholders ire

UBS long known for its conservative management and skill in wealth management is a surprise and shock to investors with a current string of losses in credit markets. More than 7,000 furious shareholders swamped annual meeting held in Basel on February 27 and expressed their displeasure in the question and answer session. Despite losing more than SFr 4.4 billion in the fourth quarter of 2007, bank distributed more than $10 billion of bonuses to employees.

UBS was one of the early casualties of subprime loan crisis and it was forced to close its Dillon Read Capital Management LP after it declared losses of SFr 150 million in the first quarter of 2007.

UBS (UBS: chart) stock in New York trading jumped $3.15 or 10% to $31.98.

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