Worst is over for UBS, says boss

Marcel Ospel has admitted that mistakes were made

The worst of the financial turmoil that has engulfed Swiss bank UBS is over, its chairman has claimed.

Marcel Ospel, who is stepping down after UBS made $37.4bn (�18.5bn) of mortgage-related losses, told investors that market conditions were improving.

Shareholders unhappy with the bank's performance are being asked to approve a $15bn capital increase at the firm's annual general meeting (AGM) in Basel.

Among the world's top banks, UBS has been worst hit by the credit crunch.

It is expected to make a $12bn loss in the first three months of 2008 alone.

'Mistakes'

The firm is turning to its shareholders to help repair its balance sheet by asking them to back a $15bn capital raising exercise.

Investors are also being asked to approve a separate plan to sell $13bn of shares to investors in Singapore and the Middle East.

We did not succeed in preparing ourselves for the financial crisis Marcel Ospel, outgoing UBS chairman

The AGM was expected to be a chastening experience for senior executives, with a number of investors, headed by former boss Luqman Arnold, calling for UBS to be radically restructured.

Mr Ospel admitted that he and other senior managers had made mistakes but argued that the bank had learnt its lesson.

"I understand the official criticism because it is true that we did not succeed in preparing ourselves for the financial crisis," he said.

"I know that there are banks that acted with more caution and did a lot better than UBS."

New boss Peter Kurer is looking for a way forward

Before the meeting, shareholders told the BBC that the bank had not appreciated the risks it was taking and that management did not have the situation under control.

While stressing that banking market conditions had improved slightly, UBS directors were expected to acknowledge that the firm's business culture had to change.

As well as substantial cost-cutting, profits from the flourishing private wealth management arm will not be used in future to support its troubled investment banking business.

Mr Ospel's successor, lawyer Peter Kurer, has already said it will take UBS up to three years to repair the damage done to its reputation by its flawed mortgage-related investments.

The BBC's Imogen Foulkes in Basel said that although UBS bosses had been contrite about what had gone wrong, shareholders would take some convincing that the worst was over.

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