In order to raise cash following its disastrous investments in the US mortgage market, UBS is holding a fire sale on its own stock, in order to raise needed capital.

UBS AG said Thursday that it would raise $15.5 billion in a rights issue at a 31% discount below the current share price.

UBS (UBS), hard hit by its exposure to the U.S. mortgage market, said it will sell new shares at $20.09 each to existing shareholders, compared with the closing price of $29.31 on the Zurich exchange Wednesday.

Shareholders will receive one subscription right per share held, with 20 of the rights entitling the holder to buy seven new shares. The new rights will be tradeable, the bank said.

Needless to say, this serves to dilute share holder equity, and it shows that there is just a bit of desperation here.