Shares in Bradford & Bingley plunged 9 per cent after a US private-equity house walked away from a deal to bail out the troubled bank
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UBS rolls out a £7.8bn cash call
Hugo Duncan, Evening Standard22.05.08
UBS today launched a deeply discounted Swfr16billion (£7.8 billion) rights issue as it became the latest bank to go cap in hand to shareholders for funds.
The Swiss bank, which has written down $37 billion (£18.9 billion) in the subprime mortgage meltdown, plans to sell new shares at Swfr21 each, a 31% discount to last night's closing price.
The issue price is below what some analysts had been expecting, with many hoping for Swfr24 or Swfr25, but still above the Swfr17-Swfr20 feared by some.
UBS shares have crashed by 36% this year, forcing the bank to bring the emergency rights issue to the market at a low level to ensure support. It will issue more than 760 million new shares, offering existing investors seven for every 20 they hold.
UBS has already raised Swfr13 billion through a cash injection from the Singapore government and a Middle Eastern investor in an effort to repair its balance sheet in the wake of the subprime crisis. It yesterday secured a $15 billion deal to sell toxic American mortgage assets to US fund manager BlackRock.
The rights issue follows similar moves by other banks including RBS.
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