Feb. 27 (Bloomberg) -- UBS AG Chairman Marcel Ospel, urging shareholders to approve the bank's plan to replenish capital, said he doesn't plan to step down as the company seeks to return to profit.

``I fully understand, and we're likely to hear it often today, that you are extremely disappointed by what has happened,'' Ospel told some 6,500 investors in Basel, Switzerland. ``I would never thoughtlessly relinquish my responsibility, and I intend to ensure that UBS gets back on the road to success.''

Ospel, who previously turned down a bonus for 2007 after $19 billion in writedowns tied to the collapse of the U.S. subprime market, said Chief Executive Officer Marcel Rohner also declined an extra payout. Some investors have called for Ospel's resignation and UBS proposed to shorten his term to one year from three, after posting the first annual loss since its creation.

Shareholders at the St. Jakob's Hall conference center will vote today on the sale of 13 billion Swiss francs ($12 billion) in bonds that will convert into shares to Government of Singapore Investment Corp. and an unidentified Middle Eastern investor.

``Ospel is responsible for the loss of confidence,'' said Hans-Christoph Hirt, associate director at London-based Hermes Pensions Management Ltd., which oversees more than $100 billion in assets. ``We are calling on Mr. Ospel to take responsibility and reconsider his post until the shareholders meeting in April.''

`This Is Theft'

Swiss President Pascal Couchepin said in an interview with the business magazine Bilan today that Ospel shouldn't keep his pay for the past years after the bank announced record losses. Several investors at the meeting today also demanded that the 12.5 billion francs that UBS paid out in bonuses last year be canceled to help pay for the writedowns.

``This is theft,'' shareholder Walter Benz said at the meeting. ``If the bonuses aren't canceled, I don't see why we should approve a capital increase.''

Losses at the bank already led to the departures of former Chief Executive Officer Peter Wuffli, finance chief Clive Standish, and Huw Jenkins, who ran the investment bank. Rohner took office in July and could have gotten a bonus for the first half of the year, Ospel said.

The 58 year-old, who was behind the merger that created Zurich-based UBS in 1998 and has been chairman for seven years, said the losses caused him ``a lot of distress.'' To the numerous resignation demands, he only said that his contract will be discussed at the regular shareholders meeting on April 23.

Rights Offering

``Until recently we had the reputation of being a cautious, even risk-averse bank,'' Ospel said. ``We were therefore all the more disappointed that we had failed to recognize the signals from the U.S. housing market in time.''

Analysts including Dresdner Kleinwort's Stefan-Michael Stalmann and Matthew Clark of Keefe, Bruyette & Woods Ltd. have said they expect shareholders to back the measures proposed by UBS. Some investors, including the Swiss pension fund Profond, are demanding that instead of selling the convertible bonds, UBS should do a rights offering to its existing shareholders.

``People are angry with UBS because they are losing a lot of money with their actions and management doesn't answer properly,'' Roby Tschopp, president of Swiss shareholder group Actares, said in an interview. ``The shareholders are being excluded from the capital improvement and there is no way that people can recover the money that is getting lost.''

UBS has fallen 35 percent in Swiss trading since terms of the bond were set in December, meaning the bank would have to sell more new shares to raise the same amount if it offers stock to existing shareholders now.

Special Audit

UBS said in December that it ruled out a rights offering because it would be more complicated and take longer. To raise the same amount from existing investors, UBS may need to sell up to 87 percent more new shares than if it sells the convertible bond, it said in a letter to investors this month.

The bank needs the backing of at least two-thirds of shareholders voting at the meeting to go ahead with the capital measures.

Shareholders voted against a special audit proposal brought up by Ethos Foundation, which needed approval of a majority. They approved a plan to raise capital by replacing last year's cash dividend with shares.

To contact the reporter on this story: Elena Logutenkova in Basel at elogutenkova@bloomberg.net

Last Updated: February 27, 2008 09:22 EST