Shareholders are set to revolt over UBS’ decision to accept a huge cash injection from Singapore and the Middle East, the Financial Times reports.
The Government of Singapore Investment Corp (GIC) sovereign wealth fund has invested billions of dollars in the Swiss bank and an unknown Saudi investor has put forward $1.73 billion in an attempt to aid the troubled bank.
A source close to the bank told the newspaper it was “a reasonable assumption” that the Saudi royal family was involved in the deal, with Prince Sultan, the crown prince and defence minister, believed to be playing a pivotal role.
However, it appears that UBS’ shareholders are none too happy with the lack of transparency and have called for UBS to explain itself. Shareholders are also keen to know how the bank came to make its latest $10 billion writedown on the sub-prime mortgage market.
Ulrich Grete, head of the Swiss Social Security Compensation Fund, says that the terms of the Singapore and Saudi investment were disadvantageous to shareholders and has appealed to UBS to name the faceless investor.
The Ethos foundation has demanded that UBS explain exactly how it lost so much on the sub-prime mortgage market and has called for a thorough audit to take place.
Although Ethos is not encouraging shareholders to block the recapitalisation of UBS by the latest investments, one influential Swiss institutional investor is rallying shareholders in preparation for the February 2008 shareholder meeting.