UBS has wrapped up a 16 billion franc ($15.4 billion) rights issue, the Swiss bank's second effort to resuscitate finances ravaged by the global markets crisis. It is the latest in a line of major banks including Britain's Royal Bank of Scotland, HBOS and France's Credit Agricole to go cap in hand to shareholders.
European banks are raising more than $40 billion from shell-shocked investors. UBS said on Friday 99.4 percent of the rights, priced at 21 francs, had been taken up. Since the start of rights trading, the bank's stock - which was up 1.4 percent on Friday at 24.66 francs - have tumbled about 15 percent. "UBS hasn't got a lot of fans," said Peter Thorne, an analyst with brokerage Helvea.
The bank, once a rock of Swiss financial prowess, is now Europe's biggest casualty of the global crisis triggered by risky US home loans. It has written $37 billion off dud investments - twice that of Royal Bank of Scotland. There are also signs that its prized wealthy clientele are growing nervous. Money flows into its wealth management business slowed to a trickle in the first three months of the year.
This prompted some shareholders such as Frankfurt Trust to pare back their stake in the bank. "UBS is handicapped," said Frankfurt Trust fund manager Dieter Ewald. "We are worried that wealth management will be hit. We want to see that the new management can bring it back on track, and then we would invest more again."
Fears that the world's rich are abandoning the Zurich-based bank are widespread. "It is hard to see how money inflows in the wealth management business will develop," said Helmut Hipper, a fund manager with shareholder Union Investment. "There is risk. It could be that customer advisers go and with them, the customers."
UBS has seen its share price dwindle to about a third of what it was a year ago as it showered investors with bad news. In February, shareholders grudgingly approved an injection of 13 billion francs from Singapore and an unnamed Middle East investor.
The latest capital hike will see a further shift in its shareholder base away from traditional fund investors in London, for example, towards hedge funds or the oil-rich Middle East, bankers have said. Its shareholders have also had to swallow other measures such as a stock dividend instead of cash to help keep its head above water.