Rights issue success promises to help restore UBS fortunes
UBS, Switzerland's biggest bank, took another step towards repairing its battered balance sheet today, as it announced a 99.4% take up for its Swfr16 billion (£7.9 billion) rights issue.
The new shares were sold to investors at Swfr21 and began trading today. UBS shares rose 80 cents to Swfr25.12.
Despite difficult stock market conditions, traders said the take-up was strong given the scale of the discount to the prevailing price.
The bank has been forced to make Swfr37 billion of writedowns in the last year due to its exposure to the subprime mortgage crisis and its knock-on effects. Analysts expect it to have to announce a further Swfr5 billion to Swfr7 billion of losses or writedowns when it reports second-quarter results in mid-August.
UBS is axeing 2600 jobs across the world with hundreds going in London.
The bank has raised nearly Swfr29 billion so far this year and wants to sell down what it calls "legacy assets" as soon as possible.
In February it sold Swfr13 billion of covertible loan notes to Singapore's sovereign wealth fund and an unnamed Middle East investor. Those notes have a conversion price of Swfr51.48.
The rump of the rights issue - 4.8 million shares - are being sold on the market today.
