UBS has announced that it expects to exercise the option to acquire the SNB StabFund’s equity from Swiss National Bank (SNB) in the fourth quarter of 2013.
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From 2008, UBS transferred a total of about US$38.7 billion of toxic securities to stabilisation fund owned jointly with SNB, as it fought to stave off collapse under the weight of more than US$50 billion in mortgage-related losses, reports Financial Times.
The SNB provided the fund with a loan to cover the assets as they were divested, and has since been running down the fund. After the initial losses, SNB has turned the assets into profitable investments and marks a shift in the central bank’s focus back to managing its gold and foreign currencies.
UBS has the right to buy back the fund for US$1 billion plus half of the fund’s equity, once the loan from the SNB, CHF1.2 billion (US$1.29 billion) of which is outstanding – has been repaid.
UBS estimates that the transaction will boost its fully applied BIS Basel III CET1 capital ratio by additional 70-90 basis points in the fourth quarter.
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