ZURICH (Reuters) - Swiss bank UBS UBSN.VX proposed re-electing veteran chairman Marcel Ospel on Thursday, despite his presiding over $18 billion in subprime writedowns, but it said it would reduce his term of office to one year.
UBS, the worst victim of the credit crisis in Europe, said it would ask shareholders to elect Ospel for another year and to cut the tenure for all new and re-elected board members to one year from three from now on.
As criticism of its chairman intensifies, a spokesman said the bank’s board still backed Ospel, but had not wanted to extend his term by another three years.
“He’s still got a job to do, and the board is behind him ... but shareholders now do not have to decide between a three-year term or none at all,” the spokesman said.
“Ospel himself handed in the motion. It is better to offer shareholders a real choice that is more suitable in the current circumstances,” he said.
Ospel has come under intense pressure after the bank’s heavy subprime writedowns of last year, and UBS shocked investors again last week by revealing tens of billions of dollars in new exposure to risky U.S. mortgages and other securities.
UBS also said the board had appointed Fiat FIA.MI Chief Executive Sergio Marchionne, already a member of the board, as non-executive vice chairman.
“We are encouraged by these moves, especially the appointment of Marchionne ... He is a highly regarded ... accountant, who has played pivotal roles in the resurrection of some large companies,” brokerage Helvea said in a note.
Marchionne has been spoken of as a possible successor to Ospel, as has Deutsche Bank (DBKGn.DE) Chief Executive Josef Ackermann, though media reports have said the latter was not interested in the job.
Fiat said Marchionne’s appointment would not change his role at the Italian automaker, a sign he is not poised to take over UBS’s chairmanship any time soon.
UBS shares were in line with the market, rising 0.9 percent to 36.66 francs by 1528 GMT. The DJ Stoxx banking index was 1 percent higher at that time. The stock has already lost more than 30 percent so far this year.
UBS said it would ask shareholders at its annual general meeting on April 23 to approve the plans.
“As a result, by 2010 at the latest, the entire Board of Directors of UBS will be confirmed on a yearly basis by the Annual General Meeting,” UBS said in a statement.
Peter Voser, finance chief at Royal Dutch Shell (RDSa.L), was named chairman of the audit committee.
“With these moves, we have strengthened the leadership structure in order to manage UBS’s current challenges,” Ospel was quoted as saying in a statement.
At a separate shareholder meeting next week UBS will ask for approval for a capital injection of some 13 billion Swiss francs ($11.87 billion) by selling a roughly 9 percent stake to the government of Singapore and a further stake to an undisclosed Middle East investor.
Small shareholders, objecting to the fact that they cannot buy any of the mandatory convertibles to be issued to those two investors, have promised an unruly meeting, with some calling for an external investigation into UBS’s troubles.
UBS last week reported a fourth-quarter net loss of 12.451 billion francs and said it lost 4.384 billion francs for the year. In 2007, it has written down roughly $18 billion on the value of subprime-related assets.
Additional reporting by Gianni Montani in Turin, editing by Will Waterman