UBS, Switzerland's biggest banking group, unveiled a near SwFr16billion (£8 billion) rights issue yesterday, one of the biggest in European corporate history, as it moved to repair its ravaged balance sheet.

The rights, which are fully underwritten, will be offered to existing shareholders at a discount of more than 30 per cent.

If successful, UBS will have raised almost $1 billion (£504 million) more than had been expected.

The move by the bank, which has written down $37 billion of its exposure to risky American sub-prime home loans, comes just a day after it offloaded $22 billion of its investment risk to BlackRock, the American money manager.

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That sale prompted speculation, reported in The Times yesterday, that UBS was poised to launch its rights issue.

Shareholders gave the bank approval to increase its share capital last month.

UBS will be offering 760 million shares at SwFr21 each, a discount of 31.46 per cent on last night's closing price. UBS shares have fallen more than 35 per cent this year.

The shares fell a further 1.4 per cent to SwFr31.06 yesterday. They have dropped more than 6 per cent this week on speculation over the capital raising.

The bank is going to its existing owners for fresh equity as a string of its European rivals seek capital to shore up their financial position. Royal Bank of Scotland is asking for £12 billion, HBOS is seeking £4 billion and Bradford & Bingley wants £300 million from its shareholders.

When completed, UBS's rights issue will be the fourth-largest in European corporate history, according to Thomson Reuters, the data provider.

It will rank behind the RBS deal, a €15 billion cash call by France Télécom, the telecommunications giant, in 2003, and a €13.1 billion capital-raising by Fortis, the Belgo-Dutch financial services group, completed last year.

France Télécom launched its rights issue as part of a €45 billion rescue plan five years ago.

The telecommunications giant employed a syndicate of 21 banks to work on its deal, while UBS has hired JPMorgan, Morgan Stanley, BNP Paribas and Goldman Sachs for its transaction.

It is understood that the underwriters will be offloading their risk to an additional group of 18 financial institutions.

UBS hopes to complete the issue over the next three weeks.

UBS is hoping that the rights issue will help it return to financial strength. The bank has been battered over the past 12 months by its exposure to American sub-prime mortgages.

The new team of executives, led by Marcel Rohner, the chairman and chief executive, have withdrawn the bank from more risky ventures after it was forced to report a full-year loss last year. UBS remained in the red for the first quarter.

About 5,500 of the workforce, including staff in London, will be made redundant, the bank said this month.

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