UBS, battered by the biggest writedowns from the collapse of the U.S. subprime mortgage market, announced plans to seek 15 billion Swiss francs (US$14.8 billion) in a rights offer to replenish capital, while New York-based Lehman, the fourth-largest U.S. securities firm, raised US$4 billion in a stock sale.

The fund-raising plans quelled speculation the companies might follow New York-based Bear Stearns Cos., which agreed to sell itself last month to JPMorgan Chase & Co. for a fraction of its market value after a run on the company. Investors looked past Zurich-based UBS’s 12 billion-Swiss franc first quarter loss disclosed Tuesday after record writedowns on debt securities, as well as Deutsche Bank AG’s US$3.9 billion of markdowns.

“When UBS does a massively dilutive deal and the stock still goes up, that’s helpful,” said Henry Herrmann, chief executive officer of Overland Park, Kansas-based Waddell & Reed Financial Inc., which manages US$65 billion. “It’s a rally associated with the presumed elimination of survival risk. The market’s getting a little more comfortable that the crisis is over.”

UBS rose as much as 3.7 percent in Swiss trading Wednesday, extending Tuesday’s 12 percent gain. It was up 30 centimes, or 0.9 percent, at 32.70 francs by 9:39 a.m. in Zurich Wednesday, bringing losses in the past 12 months to 54 percent.

Chairman Marcel Ospel, 58, who helped form UBS through a merger a decade ago, will be replaced by general counsel Peter Kurer. UBS said it plans more job cuts at the investment bank and will set up a separate unit to segregate assets at risk from the credit market meltdown.

Lehman advanced 1.1 percent in German trading Wednesday, extending Tuesday’s 18 percent gain in New York Stock Exchange composite trading. The firm increased the size of its sale to 4 million convertible preferred shares from 3 million and said demand “significantly” outpaced supply. Investors paid US$1,000 for each Lehman preferred stock, which can convert to 20.0509 common shares once the stock reaches US$49.87, or 32 percent higher than the closing price on March 31.

Macquarie Group Ltd. and Mizuho Financial Group Inc. led the biggest gains in Asian financial stocks in almost nine years.

Subscribe to The China Post and save.  Click hereSharePrintEmail

Write a Comment

Enter your comments - 800 characters max

Receive China Post promos

Respond to this email