SWITZERLAND - Shareholders at UBS' annual general meeting agreed to all proposals which means a CHF15bn (€9.3bn) capital increase will take place and Peter Kurer is new chairman of the board but only for one year.

As suggested by the Swiss bank the term of office for members of the board of directors has been reduced from three to one years as of now.

Kurer, who up until now was general counsel of UBS, took over as chairman from Marc Ospel who had unexpectedly announced his resignation on April 1. (See earlier IPE story: Ospel quits UBS amid further write-downs) 

"The sharp increase in risk taking and the desire to play the game of the large Wall Street firms have cost Ospel dearly," commented Alois Pirker from financial analysts and researchers Aite Group.

He named UBS' attempt to set up an alternative asset management business with Dillon Read Capital Management (DRCM) as one example for this.

However, in a shareholder report on the reasons for the $18.7bn (€11.7bn) in subprime losses reported for 2007 UBS pointed out "losses on the DRCM trading strategies contributed approximately 16%".  

The majority (66%) was incurred by collateralized debt obligations (CDO) held by the CDO desk of the investment banking business, the bank pointed out.

Subscription rights will be issued to UBS shareholders for a CHF15bn capital increase  in order to help the bank recover from these losses and as demanded by several shareholders including Swiss pension fund Profond.

The proposal received 97% of the votes cast by the 4,211 shareholders (representing 
680,142,555 votes) who attended the annual general meeting.

The other two proposals, Kurer's election and cutting board members' term of office each also received over 90% of the votes cast.

"As the bank of the wealthy, UBS prides itself of being extremely risk averse," said Pirker.

"It is therefore surprising that it is now the bank with the largest write-downs to date. As a result, almost none of the senior management team that was put in place after the merger between Swiss Bank and the old UBS has survived the recent turmoil."

He also added he sees calls for breaking up UBS into a wealth management and an investment banking unit being renewed.

Indeed, a few days later former UBS-head Luqman Arnold made the news with exactly this demand.

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