UBS rides to CBA's rescue from The Age

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UBS rides to CBA's rescueMalcolm Maiden  
December 17, 2008 - 1:30PM   The Age
http://business.theage.com.au/bu ... -20081217-709x.html


December 17, 2008 - 1:30PM
UBS has stepped in and completed a lightning fast underwritten $1.65 billion share placement at $26 a share to rescue CBA from the embarrassing unraveling of yesterday's $2 billion share placement through Merrill Lynch.


The UBS raising was done at a $1 a share discount to the one completed by Merrill yesterday afternoon, and was ruled off, oversubscribed, at midday.


The amount raised by UBS replaces an institutional placement of shares for the same amount completed by Merrill in two hours yesterday afternoon, and pulled by CBA this morning after buyers complained that they had not been informed that CBA had raised its loan impairment provisions.

Merrill also separately raised $350 million to replace CBA hybrid paper yesterday, and that part of deal has not been withdrawn. The amount CBA has raised is therefore the same as the $2 billion it announced late yesterday.

UBS's rapid intervention, and its offer to underwrite the replacement offer shows that while the Swiss based bank has absorbed huge losses in the global market crisis, its Australian unit continues to boast significant capital market distribution power.

CBA has its $2 billion, and with a Tier One capital ratio of 8.5% is now well placed to handle loan losses in the economic downturn as well as expansion that will need to be funded as non bank finance houses that relied on the now dysfunctional securitised debt markets continue to retreat.