UBS in capital hike after huge loss, chairman quits

By Thomas Atkins

ZURICH (Reuters) - UBS AG (UBSN.VX: Quote, Profile, Research, Stock Buzz) doubled its writedowns from the subprime crisis on Tuesday, dumped its chairman and sought more emergency capital in a second attempt to reverse its fortunes.

Its shares climbed 7.5 percent as investors hoped the move marked a turning point for the firm that now leads the global list of banks hit hardest by the credit crisis.

UBS wrote down an additional $19 billion in ailing assets, bringing to $37 billion the damage wrought by the subprime crisis and causing a net loss of 12 billion Swiss francs ($12.03 billion) in the first quarter.

It pushes UBS, Switzerland's flagship bank and financial fortress for rich investors, past Merrill Lynch (MER.N: Quote, Profile, Research, Stock Buzz) to the top of the league of writedown shame.

UBS said it would seek another 15 billion francs through a fully underwritten rights issue of shares, bringing to 34 billion francs the total of emergency capital sought by UBS, and that it would hive off ailing portions of the bank into a separate unit.

The moves were more dramatic than expected by many. This is UBS's second attempt to put the crisis, born of its breakneck expansion into investment banking, behind it.

Shares in the bank rallied as traders who had bet on even worse news struggled to cover their positions and as investors hoped the moves were enough to put the bank back on track.

"This is probably something of a turning point for UBS," said analyst David Williams at brokerage Fox-Pitt Kelton.