UBS AG warned that it may post losses on U.S. real estate in the second quarter as it seeks $16 billion from shareholders to fix an ailing balance sheet.
In a prospectus released on Monday, the Zurich, Switzerland-based bank said that market conditions were “volatile and challenging” in the second quarter.
The bank plans to sell $22 billion of U.S. residential-mortgage-backed securities to BlackRock Inc. of New York for $15 billion.
UBS recorded losses on real estate positions last year and in the first quarter this year. It said markdowns and losses “could increase” in the future.
BlackRock purchased the securities using $3.75 billion in equity raised from investors and a multi-year collateralized term loan of about $11.25 billion from UBS.
UBS posted write-downs and losses of 19.5 billion Swiss francs ($19.2 billion) resulting from its involvement in the U.S. residential and commercial real estate markets.
Shares of UBS were off $3.76, or 13%, at $25.54 in Tuesday morning trading.
The shares are down more than 60% over the past 12 months.
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