The Government of Singapore Investment Corp (GIC) is considering injecting more cash into Swiss banking giant UBS AG, the Wall Street Journal reported yesterday.
The Singapore sovereign wealth fund was considering taking part in the 15 billion Swiss franc (US$15bil) rights issue UBS announced early in April, the report said.
UBS said earlier this month it would seek new cash to improve its capital position. UBS said it expected to have lost US$12.1bil in the first quarter, including a US$19bil writedown tied to deterioration in the mortgage markets.
The writedowns at UBS for the past nine months total US$37.4bil – so far the largest reported by any bank with exposure to US defaults on risky mortgages.
GIC bought a 9% stake in UBS for US$11bil in December.
The Journal quoted a source as saying GIC would make a final decision after UBS provides the terms on any capital increase. GIC would likely have to decide whether to pump in more cash just to keep its stake at 9% or whether to buy a bigger stake, the source said.
The UBS plan to raise more capital was subject to approval at its annual meeting on April 23, the report said.
The Journal said the capital increase plan was underwritten by a syndicate of banks led by JPMorgan Chase & Co, Morgan Stanley, BNP Paribas and Goldman Sachs Group Inc.
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