Swiss bank UBS unveiled plans to raise 3.8 billion Swiss francs ($3.5 billion) in a share sale and forecast a second-quarter loss, sending its stock lower on Friday as analysts said problems remained.
UBS, the world's largest wealth manager and one of the hardest-hit major banks in the financial crisis, said late on Thursday it was to place 293.3 million new shares at 13 francs
with a few big institutional investors.
A spokesman said simple market opportunity was behind its decision to seek the new capital now at a 6.9 percent discount to Thursday's close.
UBS stock, which fell 6 percent on Thursday to 13.97 francs, was down 0.7 percent to a nine-week low at 13.87 francs at 0827 GMT. The European banking sector was up 1.2 percent.
Kepler Capital Markets analyst Dirk Becker said the move closes the largest part of the 5 billion franc capital gap that we had identified for them.
At the same time, UBS gave an update on its operating performance. We find it extremely disappointing that the bank suffered another loss, albeit apparently lower than the 2 billion franc loss for Q1, he said.
UBS said it would likely post a second-quarter loss although its operating results, helped by improved investment banking conditions and lower losses and write-downs, should be better than the first quarter.
The bank said it has seen net outflows in its three wealth and asset management units so far this quarter.
A string of negative headlines about UBS in the past year has prompted big client withdrawals, particularly over a U.S. case seeking the names of 52,000 Americans suspected of using the bank to hide nearly $15 billion in assets from the taxman.
The U.S. Justice Department denied earlier this week it was planning to drop the case and said it would file a brief seeking an enforcement of the summons on June 30 although it was still willing to consider a settlement.
UBS's woes prompted the Swiss government to inject 6 billion francs in October in exchange for mandatory convertible notes that could give it a 9.3 percent stake in the bank.
In connection with the capital raising, the government said it had agreed not to sell any UBS shares resulting from any conversion of the MCN before August 4 -- when second-quarter results are due -- without the consent of the bank.
GOVERNMENT AIMS FOR EXIT
The government has said it wants to sell its stake as soon as justifiable, but emphasized UBS had to be on solid ground first.
Swiss banking regulator FINMA and the Swiss National Bank have indicated they wanted UBS to strengthen its capital base before any government exit.
SNB Vice-Chairman Philipp Hildebrand said last week a sale of the government stake could be a positive signal but everything had to be done to improve UBS's shock resilience first.
It's certainly something the national bank welcomes. The move is in line with our expectations for UBS to increase its resilience in case the economy turns worse, SNB spokesman Werner Abegg said on Friday.
UBS's resilience has been improved in times when the economic situation could make things difficult. This is very important to us, Abegg said.
(Additional reporting by Rupert Pretterklieber; Writing by Sam Cage; Editing by Greg Mahlich and Dan Lalor)
($1 = 1.099 Swiss francs)