UBS shares jump as former boss calls for its break-up

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Luqman Arnold, chairman of Olivant, recently one of two bidders for Northern Rock, fired a broadside at his former employer after its losses of £18.5 billion in the subprime mortgage meltdown.

In a letter to UBS deputy chairman Sergio Marchionne, Arnold, who says his firm has a 0.7% stake in the bank, has demanded a meeting ahead of its annual shareholder meeting, due on April 23.

That meeting will be asked to clear an emergency $15 million rights issue and to approve the installation of lawyer Peter Kurer as new chairman following Marcel Ospel's decision to quit this week.

Arnold opposes Kurer's election as chairman and says the post should be taken by an independent director with a sound knowledge of banking. He is not proposing himself for any post. The battle marks a rematch of the events of 2001 which saw Arnold forced out as chief executive of UBS after a power struggle with Ospel. He was replaced by Ospel's man Peter Wuffli, who was also forced to resign last summer after UBS had to close a hedge fund after a $300 million loss.

Arnold's plans for UBS include selling its asset management and Brazilian and Australian businesses, which he reckons would fetch some $15 billion. He also wants to create separate entities for the private banking and wealth management business he feels has been contaminated by the losses declared in the investment bank.

Arnold said the bank "needs to act with urgency as we remain cautious about prospects for the US housing market and credit markets".