By John O'Donnell
FRANKFURT (Reuters UK) - UBS (UBSN) has wrapped up a 16 billion franc (7.9 billion pound) rights issue, the Swiss bank's second effort to resuscitate finances ravaged by the global markets crisis.
It is the latest in a line of major banks including the Royal Bank of Scotland (RBS), HBOS (HBOS) and France's Credit Agricole (CAGR) to go cap in hand to shareholders. In total, European banks are raising more than $40 billion (20.5 billion pounds) from shell-shocked investors.
UBS said on Friday 99.4 percent of the issue, priced at 21 francs, was taken up.
UBS shares were up 1.7 percent at 24.74 francs by 8:37 a.m. British time, outperforming the DJ Stoxx European banking index, which was down 0.4 percent, but since the start of the rights trading, they have tumbled by about 13 percent.
"It (the stock price) has been weak ever since they announced the rights issue," said Peter Thorne, an analyst with Helvea. "UBS hasn't got a lot of fans."
UBS, once a rock of Swiss financial prowess, is now Europe's biggest casualty of the financial crisis sparked by U.S. mortgage defaults, having written $37 billion off its credit investments, twice the figure at Royal Bank of Scotland.
There are also signs that its prized wealthy clientele are growing nervous; money flows into its wealth management business slowed to a trickle in the first three months of the year.
Dieter Ewald, a fund manager at UBS shareholder Frankfurt Trust, said such concerns had prompted him recently to pare back his investment in the Swiss bank.
"UBS is handicapped," he said. "We are worried that wealth management will be hit. We want to see that the new management can bring it back on track, and then we would invest more again."
BARGAIN BASEMENT
At roughly 24 euros, UBS shares are worth about a third of what they were a year ago.
The capital hike will see a shift in its shareholder base away from traditional fund investors in London, for example, towards hedge funds or the oil-rich Middle East, bankers and analysts have said.
This is the second time that UBS has had to reinflate its capital base. In February, shareholders grudgingly approved an injection of 13 billion Swiss francs from Singapore and an unnamed Middle East investor.
Shareholders have also had to swallow other measures such as a stock dividend instead of cash to help the bank keep its head above water.
There has been no shortage of fresh banking shares for those with any appetite. Royal Bank of Scotland, for example, recently tapped investors for about $24 billion in its rights issue.
(Additional reporting by Sam Cage in Zurich; Editing by Quentin Bryar/Will Waterman)
