Singapore’s GIC mulls further investment in UBS

April 17, 2008
Singapore Democrats

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A Singapore sovereign wealth fund is considering injecting more cash into Swiss banking giant UBS AG, the Wall Street Journal reported Tuesday.

The Government of Singapore Investment Corp., or GIC, is considering taking part in the 15 billion Swiss franc (US$15 billion; €9.5 billion) rights issue UBS announced early in April, the report said, citing two unnamed people familiar with the situation.

UBS said earlier this month it would seek new cash to improve its capital position. UBS said it expects to have lost US$12.1 billion (€7.6 billion) during the first quarter, including a US$19 billion write-down tied to deterioration in the mortgage markets.

UBS’s write-downs for the past nine months total US$37.4 billion (€23.6 billion) — so far the largest reported by any bank with exposure to U.S. defaults on risky mortgages.

GIC bought a 9 percent stake in UBS for 11 billion francs (US$11 billion; €6.9 billion) in December.

One of the unnamed sourced was quoted by the Journal as saying that GIC would make a final decision after UBS provides the terms on any capital increase. GIC will likely have to decide whether to pump in more cash just to keep its stake at 9 percent or whether to buy a bigger stake, the unidentified person said.

UBS’s plan to raise more capital will subject to approval at its annual meeting April 23, the report said.

The Journal said the capital increase plan is underwritten by a syndicate of banks led by JPMorgan Chase & Co., Morgan Stanley, BNP Paribas and Goldman Sachs Group Inc.

http://www.iht.com/articles/ap/2008/04/15/business/AS-FIN-COM-Singapore-GIC-UBS.php