UBS AG, Europe's largest bank by assets, said shareholders at its extraordinary general meeting will vote on an alternative proposal to its plan to raise capital from investors in Singapore and the Middle East.

Shareholders will vote on a proposal from Profond, a Swiss pension fund that holds one million of the bank's shares, to replenish capital by selling stock to existing investors through a rights offering, the Zurich-based bank said yesterday.

The bank will also answer questions about its risk controls from the Swiss group Ethos Foundation, which is proposing a special audit of UBS, it said in the agenda for the February 27 meeting.

UBS is seeking shareholders' approval to raise 13 billion Swiss francs (US$12 billion) from Government of Singapore Investment Corp and an unidentified Middle Eastern investor by selling them bonds that will convert into shares to replenish capital after a record loss following US$18.4 billion in fixed-income securities writedowns related to the US subprime crisis.

"In past weeks we have received letters and reactions from shareholders indicating their interest in participating in the mandatory convertible notes or a rights issue," UBS Chairman Marcel Ospel wrote in a letter to shareholders posted on the bank's Website. "We did consider such a possibility."

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 under the announced terms, it said, arguing that the latter option is in shareholders' best interests.