Enraged UBS investors turn on Ospel

Marcel Ospel, the chairman of UBS, faced shareholder dem-ands for his resignation yesterday as his controversial SFr13bn (£6.1bn) capital raising received approval from investors at a specially convened meeting.

Facing 6,500 shareholders at the gathering in the Swiss city of Basel, Mr Ospel said the bank's troubles from the US sub-prime crisis had caused him "a lot of distress" and he accepted that Switzerland's biggest lender had made mistakes.

"Until recently, we had the reputation of being a cautious, even risk-averse bank," the veteran chairman said. "We were therefore all the more disappointed that we had failed to recognise the signals from the US housing market in time."

Mr Ospel resisted calls for his resignation, saying: "I intend to ensure that UBS gets back on the road to success."

UBS has been the worst casualty of the credit crunch among Europe's major banks. In a series of announcements, it has been forced to take $18bn (£9.1bn) of charges after its investment bank got burnt trying to compete with Wall Street rivals in racy credit markets that collapsed last summer. The writedowns caused UBS to post a loss for 2007 – the first since the bank was formed nearly 10 years ago.

In a further blow, the bank is also facing a claim for losses by HSH Nordbank, a German lender, on $500m of collateralised debt obligations that HSH alleges UBS "dumped" on it before the market imploded.

The world's biggest wealth manager is raising SFr13bn to shore up its capital position and retain the trust of rich, cautious clients in its core private banking business. The bank is selling SFr11bn of debt convertible into stock to Singapore's Government Investment Corporation and a further SFr2bn of the convertible notes to an unidentified Middle East investor.

The plan has enraged some investors who will have their stakes diluted. The Swiss pension fund Profond and small investor groups called for the bank to raise the extra cash through a rights issue in which they could participate.

UBS's troubles have rocked Switzerland, whose banking sector prides itself on its conservatism and discretion. Shareholders voiced their anger at the meeting, with one calling for the ousting of the entire board and the withdrawal of their pensions. Another shareholder raged: "A bank is not a casino. You've placed high bets and you've lost a lot."

Mr Ospel, 58, was the driving force behind the merger that formed UBS in 1998. He has survived management upheavals in the past but many analysts are surprised he has not been forced out. The bank has proposed reducing his contract to one year from three years and will put the change to its annual general meeting in April.

Mr Ospel has already said that neither he nor UBS's chief executive Marcel Rohner will receive a bonus for last year. But Switzerland's Federal President Pascal Couchepin has questioned whet-her Mr Ospel should keep all the money he has made at UBS in the past, given the scale of the bank's losses.

Shareholders approved the replacement of the 2007 cash dividend with stock to add SFr4.4bn to UBS's tier one capital, which acts as a buffer for depositors against losses. The capital injection will help boost UBS's tier one capital ratio to around the 12 per cent mark it believes wealthy clients expect if they are to keep their business with the bank.

Investors also voted against a motion by Ethos, a Swiss shareholder group, calling for a special audit to assess UBS's risk management systems.