UBS shareholders approve GIC’s $14b capital injection

By Grace Ng, ST

UBS shareholders approved last night an 11 billion Swiss franc (S$14.16 billion) injection by the Government of Singapore Investment Corp (GIC) into the Swiss banking giant following a tempestuous marathon meeting.

Those who attended the emergency meeting in Basel, Switzerland, fumed over the billions of dollars UBS lost as a result of its exposure to the United States sub-prime mortgage crisis.

But seven tense hours after the meeting started at 5pm Singapore time, some 6,500 shareholders present voted overwhelmingly in favour of the proposed capital injection totalling 13 billion Swiss francs by GIC and a Middle Eastern investor.

About 599 million votes were in favour, far exceeding a two-thirds majority of 458 million votes needed for the proposal to pass.

They also approved the bank’s proposal to replace a cash dividend with a share dividend, allowing the bank to raise 4.4 billion Swiss francs and fortify its balance sheet.

Many shareholders arrived at the meeting on a train called the UBS Special, put on especially for the event.

Before the vote, livid shareholders castigated UBS chairman Marcel Ospel over the bank’s hefty 20 billion Swiss francs’ worth of charges related to investments in US sub-prime mortgages.

The write-downs dealt UBS its first full-year loss in over a decade.

One furious shareholder even tried to storm the stage, where the UBS board was seated, The Associated Press reported.

‘I think it would be better if the whole board would be replaced and that their pensions be withdrawn,’ said an angry Swiss shareholder.

Another said: ‘A bank is not a casino. You’ve placed high bets and you’ve lost a lot.’

The meeting at St Jakob’s Hall, a sports arena and concert hall in Basel, started 15 minutes late, ‘contradicting Switzerland’s reputation for rigorous punctuality’, to accommodate ‘extra numbers in two overspill halls’, reported the Financial Times.

Mr Ospel kicked off the meeting with an impassioned plea to shareholders to back injections of 11 billion Swiss francs from GIC and another two billion Swiss francs from an unidentified Middle Eastern investor.

Some shareholders, such as Swiss groups Actares and pension fund Profond, earlier called for a rejection of capital infusion, saying it was unfair that they could not participate in the convertible bond issue. They instead sought a rights issue.

Mr Ospel insisted the capital infusion was ‘absolutely necessary’ to help UBS get back on its feet.

He also turned down calls for his resignation, saying he would not ‘thoughtlessly relinquish” his duties.

The current crisis is the most difficult since the 1929 market crash, and UBS ‘judged certain markets wrongly’, said Mr Ospel.

‘We subsequently noticed this error, but due to the rapid evolution of events were unable to react in time,’ he said.

Still, Mr Ospel, 58, who helped push a merger that created UBS 10 years ago, said it was his ’supreme duty’ as co-architect of UBS to ’stay on the front lines’ and ensure the bank ‘gets back on the road to success’.

He also said UBS was looking for senior bankers to join its board.

UBS is reportedly having difficulties finding anyone willing – or brave enough – to take the hot seat Mr Ospel has occupied for seven years.

More than 50 shareholders rose to speak – limited to five minutes each.

Some shareholders expressed fears that UBS could face further hefty write-downs this year.

Mr Ospel told shareholders: ‘I fully understand, and we’re likely to hear it often today, that you are extremely disappointed by what has happened.’

S’pore sets up R&D centre for solar energy

By Jessica Cheam, ST

Harnessing the sun’s heat to cool a building might seem counter-intuitive.

But innovative ideas such as this are exactly what Singapore’s newly established solar research institute hopes to turn into reality.

A new research and development (R&D) centre to cement Singapore’s position as a serious solar energy player was unveiled yesterday.

It was set up by the National University of Singapore (NUS) and the multi-agency Clean Energy Programme Office, managed by the Economic Development Board (EDB).

The Solar Energy Research Institute of Singapore, or Seris, will get $130 million to spend over the next five years and aims to be a leading solar R&D centre in Asia, said EDB yesterday.

The centre has scored a coup by attracting Professor Joachim Luther from Germany, outgoing head of the world-renowned Fraunhofer Institute for Solar Energy Systems, one of Europe’s leading solar energy R&D centres.

Prof Luther said he was offered the post of Seris chief executive by NUS and EDB after talks that started last July. He said he was attracted by the opportunities here.

‘I like to make things happen – $130 million is a very reasonable budget and we can do a lot,’ said Prof Luther. He will lead an initial team of 25 researchers at Seris, which will begin operations in April at a location near NUS.

It aims to have a laboratory size of 5,000 sq m in the next five years.

Prof Luther said yesterday the centre’s holy grail is to bring down the costs of harvesting solar energy by 50 to 70 per cent through R&D.

Three research focus areas have also been identified: R&D in silicon-based solar cells to find more efficient ways of using silicon, novel photovoltaic devices and materials and innovative solutions for solar and energy efficient buildings.

Prof Luther added that he has already contacted several top-notch foreign solar researchers to join the team. The institute expects to grow to 90 researchers, and produce 50 doctorate and 20 master’s students in five years.

EDB managing director Ko Kheng Hwa described Seris as filling a ‘critical R&D gap’ in Singapore’s solar sector.

Minister of State for Trade and Industry S. Iswaran, who was guest of honour at the launch, cited the event as ‘yet another milestone in Singapore’s development of the clean energy eco-system’.

The global solar market was estimated at US$30 billion (S$42.4 billion) last year and is projected to continue its strong growth rate to reach more than US$100 billion by 2011, said Mr Iswaran.

‘Successful R&D has been and will continue to be the differentiating factor between the success stories,’ he said.

Industry players such as Mr Christophe Inglin, managing director of solar firm Phoenix Solar, welcomed the news, saying that such an R&D institute was ‘long overdue’.

‘The research areas are also commendable, and well positioned to break new ground,’ said Mr Inglin. ‘What’s left missing in the whole picture now is a local market for us to try the technology out ourselves.’

Rising butter prices hit bakers

By Natalie Soh, ST

The price of another staple – butter – is on the march north, leaving bakers here and abroad reeling from the impact.

In the last year, wholesale prices have more than doubled, and food companies here say consumers will have to foot the bill.

One major baked goods and cake manufacturer told The Straits Times that it pays US$4,000 (S$5,600) to US$4,200 per tonne of butter now.

This is up from about US$1,700 per tonne in January last year.

Some bakers have, in turn, passed it on, upping the price of baked goods by 20 to 30 per cent. Even those who have been holding out say they cannot maintain prices much longer.

Some firms are switching to cheaper alternatives, such as margarine.

The major supplier of butter products here, New Zealand company Fonterra, said it has seen the global price of butter double in the last year.

In January alone, the average retail price of the spread jumped a further 17 per cent, from $2.90 to $3.40 per standard block.

Voracious demand from China and India, along with a lingering drought in Australia, a major dairy producer, has forced global prices upward.

A lower-than-expected supply from South America, due to export restrictions, has added to the shortage.

Still, Fonterra’s spokesman said that there is enough butter stocks here to meet demand for now.

Soya prices soar as shortage hits home

By Jessica Lim, ST

A worldwide shortage of soya beans has hit Singapore hard: Importers say prices have doubled, and the cost of items such as tofu could go up soon.

Though rising food prices have affected several items, soya beans are the worst hit – from $600 a tonne a year ago, prices are now at about $1,200.

That spells bad news for a group already hit by rising prices: the less well-off.

Soya products such as tofu are a staple food for them, said Ms Anna Jacob, a nutritionist at private nutrition consultancy firm NutriVentures.

She explained: ‘Soya beans are cheap, a good substitute for meat and protein-rich.’

Already, prices of soya bean products have risen in the past few months – at some places, a cup of soya bean milk costs 20 cents more. But more increases could follow.

The price hikes are down to a lack of supply from big producers such as the United States.

Farmers there are opting to plant maize and wheat – which are fetching sky-high prices because of an increased demand for bio-fuels – instead of soya beans.

Higher demand from China has also contributed to the increase in prices.

The effects have hit most Asian countries, because soya products are widely consumed there in various forms.

In Indonesia, for example, thousands of tempeh (fermented beancurd) and tofu manufacturers and vendors went on strike last month to protest against the rising prices.

And just this month, Japan initiated a fresh round of price hikes on soya products.

Soya beans are big in Singapore too, and importers last year brought in 18,974 tonnes of the stuff, which was eventually turned into products such as taupok (fried beancurd), soya sauce and tofu.

The larger manufacturers of soya bean products said they are struggling to maintain profits, and will be negotiating among themselves on a price increase soon.

Industry insiders said this could mean a 12 per cent rise in the prices of packaged soya bean products in the next few weeks.

Major tofu producer Unicurd, which supplies about 60 per cent of the packed tofu in Singapore, said it has seen profit margins fall by about 30 per cent since last year.

Said its general manager, Mr Allan Tan: ‘Tofu is a cheap alternative for meat and just as protein-rich. It’s a poor man’s food so we try our best to keep prices unchanged.’

Tai Hua Food Industries, which produces about 5,000 tonnes of soya sauce a year, has increased prices of the soya sauce it exports – about 35 per cent of what it produces – but has kept prices of products sold here unchanged.

Both producers said they cannot keep prices down for much longer.

Previous price rises have already hit buyers and sellers.

At Tekka Market, tofu seller Ng Boon Hwee said he tagged another five to 10 cents to the price of each piece of tofu sold – an increase of 20 per cent per piece – last month.

When The Straits Times spoke to him, the 55-year-old shook his head, pointed at his stock of 150 pieces of tofu, and said he had raised prices only three times in the past 30 years.

He added that he had never seen costs so high. In fact, he said, he had to buy fewer pieces to stock his shelves because tofu is so expensive now.

A Straits Times check of eight other shops – from those in wet markets to beancurd outlets such as House of Yummy Beancurd – show that all have raised their prices by 12.5 per cent to 25 per cent over the past two months.

Beancurd chain Selegie Soyabean started charging 20cents more for a soya bean milk drink at the start of this month.

Owner Andrew Koh, 45, said a few customers ’showed black faces’, but became more understanding after he explained the situation.

The bad news is that it does not look like the situation will ease any time soon.

A spokesman for Canadec, the major soya bean importer here, said the situation will not get better ‘for the next two or three years’.

He said: ‘This is because demand for crops like wheat and maize is still high, so acreage for soya beans is limited.’