UBS’s plans to recapitalise its business after heavy write-downs will assure worried clients that the Swiss bank is well-placed to protect their interests, executives said. The Zurich-based wealth management and banking group, which has announced it will raise $15 billion from a rights issue, said in a conference call with analysts and journalists that the additional capital would reassure its clients and investors that the business was sound. “We have been able to show our clients and our investors a clear way out of this crisis,” Marcel Rohner, chief executive of UBS, said. In a statement, UBS said the rights issue, to be wholly underwritten by Morgan Stanley, BNP Paribas JPMorgan and Goldman Sachs, will increase its Tier 1 capital ratio, as defined by Basel II banking regulations, to 10.6 per cent, up from 8.8 per cent at the end December 2007. As a result of the rights issue, UBS will be one of the best-capitalised banks in the world, the company said. Without the rights issue, UBS’s Tier 1 ratio of capital to risk weighted assets would have dropped, Morgan Stanley analysts argued in a report. Morgan Stanley, which has an underweight recommendation on UBS, said UBS’ wealth management arm is likely to underperform rivals such as Julius Baer and Credit Suisse. "We also think that the intense press focus and size of losses are not helpful for the private banking business and we think inflows could slow into 2008," Morgan Stanley said of the sector as a whole. "While some of this, no doubt,comes from weaker markets holding investors back, we think UBS will underperform Credit Suisse and Julius Baer on net new money. For instance we estimate about 5.2 per cent net new money for Credit Suisse [private bank arm]," the report said. On the other hand, Morgan Stanley predicts that UBS's private banking net new inflows will be just 1 per cent this year. Investors such as Paul Vrouwes, who helps to manage European equities at the investment arm of Dutch financial group ING, said UBS's moves to raise capital were positive although he was concerned about the Swiss bank's short-run prospects. "We still like UBS but we expect some more headwinds in the investment bank - potentially even more writedowns and a shutting down of some activities, leading to lower revenues and profits," said Mr Vrouwes in a report by Reuters. "There will also be some headwinds in the private bank from lower equity markets, lower turnover in portfolios and a shift from higher margin to lower margin business for clients," he said. "The higher Tier 1 ratio and lower position in troubled assets will reassure wealth management clients," he said. UBS’s announcement cheered investors that the bank had acted to strengthen its business and restructure its operations by putting distressed credit assets into a separate work-out vehicle. At one stage on Tuesday, UBS shares were up by more than 12 per cent on the Swiss stock exchange. The share has recovered from a 52-week low of SFr24.2, closing at SFr32.4. As reported on Tuesday, UBS chairman Marcel Ospel will not seek re-election later this month at the bank’s annual meeting on 23 April. Peter Kurer, currently chief counsel, is proposed to take up the chairmanship. The bank expects to report a net loss of about SFr12 billion ($12.0 billion) in the first quarter.