ZURICH (Reuters) - UBS Chairman Marcel Ospel faces angry shareholders for the last time on Wednesday, seeking authority for the second emergency capital in months that meant the end of his career.
Ospel, bated by Swiss media for a disastrous venture into the fixed income business, survived a barrage of criticism from investors at a meeting earlier this year, as the bank struggles to patch up a gaping hole from subprime losses.
But news that UBS was writing down an additional $19 billion as its investments shriveled -- bringing the total cost of its subprime fiasco to $37 billion, the highest of any bank in the world -- was too much even for the resilient Ospel to tough out.
“We have made mistakes, and we have learned our first lessons from them. Our future management will continue to learn from the things we did wrong,” Ospel said in the text of a speech he was to deliver at the annual meeting.
His words mark the low point of the career of the 58-year-old banker, who bulldozed his way to the top from humble beginnings in Basel, on Switzerland’s border with Germany, and it leaves UBS in the biggest crisis in its history.
The three-times married banker was the architect of what was originally meant to be called United Bank of Switzerland -- the fusion of Swiss Bank Corporation and Union Bank of Switzerland in 1998. He later masterminded the acquisition of U.S.-based PaineWebber.
Ospel had once been seen as an outsider at UBS, which had been known as the colonels’ bank due to an unwritten code where only those in the Swiss army were advanced up its career ladder.
But as the cost of the bank’s subprime adventures piled up, the names of successors swirled, including that of Fiat Chief Executive Sergio Marchionne and Deutsche Bank’s Swiss-born head Josef Ackermann.
Peter Kurer, a little-known lawyer, has now emerged as the only candidate to succeed Ospel, despite the objections of former UBS chief and shareholder Luqman Arnold.
Ospel, who became UBS chairman in 2001 after cutting his teeth in securities trading with wall street’s Merrill Lynch and then moving to UBS predecessor SBC, is not a well-loved figure in Switzerland.
Swiss tabloid daily Blick lampooned him in a front-page story in 2006 that published Ospel’s salary, which at 26 million Swiss francs ($24 million) made him the highest-paid company chief in Switzerland.
A Swiss banker at a smaller rival private bank in Zurich, who knew Ospel at school, said before his resignation that Ospel had overstayed his welcome.
“His time is over,” he said. “You cannot preside over a disaster like this without accepting responsibility.”
Ironically, Ospel owed his rise to the collapse of a hedge fund set up by financial wizard Myron Scholes. When UBS’s investment in the fund crashed in 1998, the bank’s then chairman was ousted.
The current crisis has also been spawned by a hedge fund -- the Dillon Read Capital Management unit set up by UBS, which invested heavily in subprime mortgages.
Ospel reacted as he had so often before, sacking top management. CEO Peter Wuffli was replaced by former wealth-management chief Marcel Rohner. UBS later replaced its chief financial and risk officers.
But as the subprime crisis claimed the scalps of rival bank chiefs such as that of Citigroup’s Charles Prince or Merrill Lynch’s Stan O’Neill, the noose around Ospel tightened.
In February, shareholders grudgingly approved an injection of 13 billion Swiss francs ($13 billion) in fresh capital from Singapore and an unnamed Middle East investor.
Ospel then finally announced his departure after UBS posted yet another heavy round of writedowns this month. It appeared to be a sudden change of heart by Ospel, the bank having said on the morning of the announcement that he would stand for reelection.
Editing by Douwe Miedema, Paul Bolding
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