SWITZERLAND - Crisis-ridden Swiss bank UBS has announced another capital increase in a bid balance out further write downs of $19bn (€12bn) on subprime-related assets.

In a conference call this morning, UBS chief executive Marcel Rohner confirmed losses attributable to shareholders for the first quarter of 2008 will amount to CHF12bn (€7.6bn).

Together with CHF4.4bn of losses and $18bn in write-downs already reported for 2007, the bank sees the need for another capital increase.

This time all shareholders will be invited to participate in the rights issue which is fully underwritten by four banks.

Smaller shareholders like the Swiss pension fund Profond had criticised the first capital increase via  CHF13bn in mandatory convertible notes issued to two large Asian investors. as UBS refused to allow smaller shareholders to contribute capital through a new share raising (See earlier IPE story: "Strong investor" could help small UBS shareholders - Profond)

"We are very glad the bank has decided on another capital increase and that it is even higher than we demanded," Herbert Brändli, president of Profond, told IPE today.

He also commended the bank on being so transparent about the further losses and future endeavours.

However, what makes Brändli most hopeful of an improved future for the bank is the departure of chairman Marcel Ospel.

Brändli said in an earlier interview he hoped Ospel would leave the running of the bank to someone else and only stay on as "a useful figurehead which brings in the contacts".

"I am glad Ospel has freed the way for the new heads to act more powerful and effective. Maybe - in the distant future - new heads will be added to the team and some old ones might leave. I think it is clear who is really contributing and who is not," " he added, without citing specific names.

The board of directors will propose Peter Kurer, currently general counsel of UBS, as Ospel's successor at its annual general meeting (AGM) on April 23.

Ospel's resignation came as a surprise to many attendees of the conference call as UBS had already sent out invitations to the AGM proposing the re-election of Ospel, and then had to re-issue new invites this morning.

But Ospel argued he had stated an intention to step down as chairman of the board a year ago before the financial market crisis.

"When the crisis worsened, I offered to stay on in order to help solve the imminent challenges and problems the bank was facing," Ospel explained.

"Now I have done everything I can to help the bank deal with the difficult situation, we talked about it on the board yesterday and I handed in my resignation."

Asked whether his stepping-down was part of the solution to UBS's problems, Ospel said: "If people want to see my leaving as part of the solution, I can live with that."

He did not reveal any details about his future but only noted he "will be very busy until the AGM".

UBS also announced it will put most of its US real estate-related holdings into a separate entity in order to "minimize the effect of the subprime crisis on the core business".

Rohner noted while the new entity will at first be 100%-owned by UBS, the bank might
sell parts of it in the future.

The CEO also confirmed there were further net asset outflows from the global asset management business but stressed the bank will "continue to aim for profit" in this and its other businesses, noting there will be no cross-subsidising between businesses within UBS as every part has to be profitable on its own.

In order to improve the bank's internal structure staff reduction might also become necessary, he said but details and figures will only be released later.

Rohner noted he is convinced this was the last capital increase necessary to save the bank.

However, at the same time he noted the losses announced for the first quarters were only estimates as the books were only closed last night.

"We hope that this is the end of write-downs," said Profond's Brändli cautiously. "But the course is set for a positive future and we are optimistic."

If you have any comments you would like to add to this or any other story, contact Julie Henderson on + 44 (0)20 7261 4602 or email julie.henderson@ipe.com