Page last updated at 08:34 GMT, Wednesday, 21 May 2008 09:34 UK

UBS sells loans in cut-price deal

UBS office logo
UBS has suffered more than any other bank from the US sub-prime turmoil

Swiss bank UBS has sold loans - with a nominal value of about $22bn - to fund management group Blackrock for $15bn.

UBS said that the move was "risk reduction" which was "a critical part" of its ongoing financial restructuring after its exposure to sub-prime loans.

The deal represents a $7bn loss for UBS on the assets it had accumulated.

BBC business editor Robert Peston said the deal may have implications for the way losses on assets linked to the US housing market were calculated.

UBS is also lending Blackrock $11.25bn to help it finance the deal.

My brain can't quite come to terms with the extraordinary financial implications of all this
Robert Peston
BBC Business Editor

The assets being sold include sub-prime, prime mortgage-backed securities and Alt-A (a grade of US mortgage debt that is just a bit better than sub-prime).

Job cuts

"My brain can't quite come to terms with the extraordinary financial implications of all this, even though the terms of the deal have been known for some time," the BBC's business editor said.

"UBS has suffered a genuine, eye-wateringly large loss on the sale of assets it should never have accumulated, but is remaining exposed to those assets to the tune of $11.25bn," he added.

The cut-price sale of the assets were "not a notional accounting loss, but a real loss of hard cash", he added.

UBS chief executive Marcel Rohner said the sale was "a big step towards further reducing our positions in this asset class".

The Swiss bank, which has suffered huge losses as a result of the US sub-prime mortgage crisis and credit turmoil, said earlier this month that it was cutting up to 5,500 jobs.

The job losses - 7% of the workforce - will go by mid-2009 through redundancy, redeployment or natural wastage.

The bank made losses for the first quarter of 2008 of 11.5bn Swiss francs ($11bn; 5.5bn).

Swiss bank UBS cuts 5,500 posts
06 May 08 |  Business
Worst is over for UBS, says boss
23 Apr 08 |  Business
UBS admits errors to shareholders
21 Apr 08 |  Business
Investor calls for UBS break-up
04 Apr 08 |  Business
New UBS boss admits to 'damage'
16 Apr 08 |  Business
UBS doubles sub-prime writedowns
01 Apr 08 |  Business
Unhappy times for UBS investors
01 Apr 08 |  Business

The BBC is not responsible for the content of external internet sites

Has China's housing bubble burst?
How the world's oldest clove tree defied an empire
Why Royal Ballet principal Sergei Polunin quit


Sign in

BBC navigation

Copyright © 2017 BBC. The BBC is not responsible for the content of external sites. Read more.

This page is best viewed in an up-to-date web browser with style sheets (CSS) enabled. While you will be able to view the content of this page in your current browser, you will not be able to get the full visual experience. Please consider upgrading your browser software or enabling style sheets (CSS) if you are able to do so.

Americas Africa Europe Middle East South Asia Asia Pacific