UBS has offered more than 293.3 million new shares from authorized capital to a small number of institutional investors at 13 Swiss francs (CHF) per share. After deducting costs associated with the placement, the amount of new equity capital expected to be raised is approximately CHF 3.8 billion or $3.5 billion.
But the Swiss-based bank and wealth manager also has said that, based upon preliminary results for April and May and estimated results for June, it expects to incur a net loss for its second quarter 2009. The majority of the expected loss is attributable to own credit and the restructuring charges that have already been announced. Still, UBS says, the operating result for the quarter is expected to represent an improvement compared with the first quarter of 2009, largely due to better market conditions affecting the investment bank and a reduction in losses and write downs on legacy risk positions.
Net new money has been negative in the three wealth and asset management divisions in the second quarter of 2009 to date. UBS’ wealth management operations in the Americas, some of which were sold to Stifel Nicolaus in March, include about 8,200 advisors.
UBS is expected to announce its second-quarter results on August 4. The organization is now being led by Oswald Grubel, formerly of Credit Suisse, who has called for some 8,700 jobs or 11 percent of the work force to be cut.
Earlier in June, the U.S. Justice Department denied that it planned to drop a case seeking the names of 52,000 U.S. clients who may have used the bank to hide some $15 billion in assets from the IRS. According to Reuters, the Justice Department plans to file a brief seeking to enforce the June 30 summons tied to the case but also indicated that it is open to considering a settlement.
Due to a reduction in risk-weighted assets, UBS’ Tier 1 capital ratio is expected to be higher at 30 June 2009 than at 31 March 2009. The Tier 1 capital ratio is not affected by own credit charges.
UBS will announce its results for the second quarter on 4 August 2009.
For full-year 2008, the total net impact of all restated items was a reduction of net profit and net profit attributable to UBS shareholders of CHF 405 million, a reduction of equity and equity attributable to UBS shareholders of CHF 269 million, and a reduction of basic and diluted earnings per share by CHF 0.15 and CHF 0.14 respectively. (See www.ubs.com/annualreporting.)