Shareholders ask for UBS chairman to resign
On the 28 of February, the chairman of the largest bank in Switzerland had to face the demand of majority of the shareholders in the bank for his resignation. The angry shareholders were asking for his resignation as a result of him admitting some of the mistakes the bank had made as a result of the sub prime crisis. The demands for his resignations were made when his controversial SFr13bn (£6.1 billion) fund raising got the approval from most of the investors during a specially called meeting.
During the specially convened meeting the bank’s chairman announced that the ongoing sub prime crisis in the US market had caused him to go through a lot of stress and that the bank during this period of time had made some mistakes. While facing an audience of almost 6,500 shareholders in the city of Basel Marcel Ospel admitted that the largest money lender in Switzerland had not been doing too good in the recent past. He said that it was a result of the economic turbulences that were happening in the country of USA.
He acknowledged the fact that the bank had been completely unable to recognize the signs that were coming from the US housing market at the right time. The fact that UBS was a very cautious and careful bank, which was even averse to risky banking, makes the situation even more depressing. He admitted that the bank had faltered in reading the signs well. However he waived off the cries for his resignation by saying that he would not go away until he had brought UBS back into the path of success.
UBS till date was one of the worst affected banks in Europe as a result of the credit crunch in the USA. Through a series of declaration, the bank has been forced to get $18 billion (£9.1 billion) of fees. This was because the investment bank suffered a lot of losses trying to compete with the rivals on Wall Street in many fast credit markets which collapsed almost completely last summer. This was a major blow to the bank and resulted in UBS having to declare a loss for the year 2007. This was the first time the bank reported a loss since it was formulated almost 10 years ago.
As if to make thing worse, the bank took another blow when HSH Nordbank, a lender in Germany claimed for losses from UBS. The claim was on $500 million of guaranteed debt obligations that the German lender says UBS abandoned on them just before the markets crashed.
Now the bank is trying to raise a huge capitol to enhance its capital position and to retain the big rich clients it had always had. The plan however has not pleased many investors as the move would mean they will have a portion of their stock diluted. Whatever the move is going to be, it is going to create a lot of tension amongst the shareholders of the company.
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