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Shell/UBS director, Peter Voser, in UBS crisis discussions with activist investor

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THE WALL STREET JOURNAL: UBS Opens Discussions With Dissident Investor

By KATHARINA BART
April 19, 2008

UBS AG has bowed to shareholder pressure and has begun talking with an activist investor calling for significant changes at the Swiss bank.

UBS on Friday said board members Serge Marchionne and Peter Voser met with Olivant Advisers Ltd., a London-based investment firm with a 1.1% stake in the Zurich-based bank. Olivant is led by former UBS Chief Executive Luqman Arnold.
 
Mr. Arnold said, “We had an open and constructive discussion and they gave their commitment that they are taking all of our views into consideration as they prepare for the annual general meeting.”

UBS declined to comment on the content of the talks. Messrs. Marchionne and Voser weren’t available to comment.

In recent weeks, Mr. Arnold has rallied shareholders around Olivant’s calls for changes, garnering support for its demand that UBS launch a search for an independent chairman with banking experience. In addition, Olivant has urged the Swiss bank to consider splitting its investment bank from its private banking arm, which manages money for wealthy clients. UBS has thus far resisted breakup calls.

Mr. Arnold, who was ousted as chief executive of UBS in 2002, has accumulated a 1.1% stake in UBS, which translates to nearly $777.2 million at current market prices.

UBS will face increasingly unsettled investors at its shareholder meeting Wednesday, where it’s seeking approval for a 15 billion Swiss francs ($14.74 billion) capital increase to cover major losses on subprime and other mortgage securities. While shareholders are expected to vote in favor of the capital increase, the UBS choice of Peter Kurer, UBS’s general counsel, as successor to longstanding Chairman Marcel Ospel has faced intense criticism from Olivant and other shareholders. Mr. Kurer is perceived as an excellent lawyer with experience in mergers and acquisitions, but has been criticized for his lack of banking expertise.

Mr. Ospel was forced to resign after the bank took $37 billion in write-downs for dodgy mortgage securities.

The Government of Singapore Investment Corp., or GIC, said it will back Mr. Kurer. GIC was instrumental in UBS’s attempt to raise fresh capital earlier this year, providing around $10 billion in fresh funds.

Mr. Marchionne, who runs Italian car maker Fiat SpA, and Mr. Voser, financial chief at Royal Dutch Shell PLC, are seen as independent and influential members of the UBS board, which has been criticized for having been dominated by Mr. Ospel.

The UBS board consists mainly of nonbankers such as Ernesto Bertarelli, former owner of Swiss biotech firm Serono SA and Helmut Panke, former CEO of German car maker BMW AG. However, to counter this weakness and address shareholder concerns, UBS recently nominated David Sidwell, a former chief financial officer at U.S. investment bank Morgan Stanley, to its board.

UBS shares on Friday rose 1.86, or 5.4% to 36.10 Swiss francs.

Write to Katharina Bart at [email protected]

Headline by John Donovan of www.royaldutchshellplc.com

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