UBS, THE biggest European casualty of the US subprime crisis, yesterday surprised investors by announcing it would raise slightly more than expected through the deeply discounted rights issue approved by shareholders last month to boost capital ratios.

The move came as chief executive Marcel Rohner said in a Swiss media interview to be published today that UBS did not foresee more massive writedowns in its troubled US credits on the scale of the $19 billion (€12 billion) hit announced last month.

Mr Rohner told Swiss business magazine Bilanz that the bank did not envisage "any further writedowns on the scale we announced them on April 1st". But he declined to comment further on the possibility of smaller losses, depending on market conditions.

Last month's hit, coming on top of the $18 billion written down last year, obliged UBS to embark on its second major fundraising this year to boost its capital.

The bank yesterday said it would offer shareholders seven shares for every 20 held, pricing the new stock at 21 Swiss francs.

The 760 million new shares would raise almost SFr16 billion (€9.86 billion), SFr1 billion more than indicated at last month's shareholders' meeting. The pricing represents a steep discount to Wednesday's SFr30.64 close in Zurich. UBS shares, which have recovered somewhat from their nadir during the worst of the credit crisis, have been under renewed pressure this week on revived concerns about bank's credit quality and worries about the pricing of the rights issue.

Initial reactions from analysts were of relief that UBS had not priced its new stock even more cheaply, after some investors had feared the shares would come in the SFr17-SFr20 range.

The deal has been fully underwritten by a consortium of JP Morgan, Morgan Stanley, BNP Paribas and Goldman Sachs, ensuring UBS will receive its funds, irrespective of shareholders' response. Trading will start on June 13th. - ( Financial Times service)