How to boost invester confidence

$5b to boost investor confidence


SWISS bank UBS is planning to raise 3.8 billion Swiss francs ($5 billion), by selling 293 million shares to a few institutional investors for 13 Swiss francs per share, the troubled company said on Thursday.Existing shareholder, the Government of Singapore Investment Corp (GIC), "did not participate in the capital-raising exercise as we are already a large investor". GIC injected 11 billion Swiss francs into the bank last year and now holds a stake of about 6 per cent."The capital-raising helps strengthen confidence in UBS and the Swiss financial centre,'' UBS said in a statement.
"UBS is taking this action now in order to take advantage of current market opportunities. This is not related to any particular event.''Still, its extra capital-raising may spark fresh fears about the state of bank balance sheets, months after the shocks in the global banking system seemed to have ended. Last week, the Swiss National Bank said it was still not comfortable with the leverage of the country's big banks.
UBS also said on Thursday that it expected to post a net loss of an undisclosed amount for its second quarter during its results announcement on Aug 4. "The majority of the expected loss is attributable to own credit and the restructuring charges that have already been announced," it said.The bank added that the operating result for the quarter would likely represent an improvement compared with the first quarter of 2009, largely attributable to better market conditions affecting its investment bank and a reduction in losses and writedowns on legacy risk positions.