http://www.bloomberg.com/apps/news?pid=20601087&sid=aItZpGnjX31Y
Singapore’s GIC Becomes Biggest Shareholder of UBS (Update1)
By Lars Klemming and Elena Logutenkova
March 5 (Bloomberg) -- Government of Singapore Investment Corp. said it completed the conversion of 11 billion Swiss francs ($10.2 billion) of notes in UBS AG into stock, generating an unrealized loss of about two-thirds of the investment.
GIC, manager of more than $100 billion of the city-state’s foreign reserves, exchanged the mandatory convertible notes for shares today, said Jennifer Lewis, a spokeswoman for GIC. GIC becomes the bank’s biggest shareholder with a 6.6 percent stake. UBS is Switzerland’s biggest bank.
UBS shares have lost 69 percent to 15.86 francs since the bank announced the sale of the mandatory convertible notes on Dec. 10, 2007 to shore up capital eroded by subprime writedowns.
Together with an unidentified Middle Eastern investor who injected a further 2 billion francs, GIC received 9 percent annual interest for the past two years. That means they face combined paper losses of 6.3 billion francs at UBS’s closing share price. GIC has said previously that it has “confidence” in the “long-term prospects” of UBS.
Since then, UBS’s writedowns and losses from the credit crisis swelled almost threefold to more than $57 billion, the most of any other European financial company, and the bank had to turn to investors including the Swiss government three more times to boost capital.
The bank last month reported its first quarterly profit in more than a year, helped by a recovery at the investment bank and a lower charge on the company’s debt. Chief Executive Officer Oswald Gruebel, who aims to boost UBS’s annual pretax earnings to 15 billion francs in three to five years, is battling to stop withdrawals by wealthy clients, who’ve removed a net 228.1 billion francs over the 21 months through December.
UBS may report its first annual profit since 2006 this year after spinning off $38.7 billion in assets into a central bank fund, cutting 18,500 jobs and appointing 11 new managers to the executive board, according to analysts’ estimates.
