Noel Illien
ZURICH (Reuters) – UBS will set aside about $900 million to repay investors in Credit Suisse funds that were linked to collapsed supply chain finance firm Greensill Capital, representing 90% of their debt, UBS said on Monday.
The bank is trying to resolve problems it inherited when it acquired Credit Suisse last year after a string of financial problems led to the collapse of its longtime rival.
Among them was a loss of 1.6 billion Swiss francs ($1.80 billion) due to the collapse of $10 billion of Greensill-linked supply chain finance funds in 2021.
Supply chain finance deals, also known as reverse factoring, which are portrayed as low-risk, allow companies to raise cash from banks and funds such as Greensill Capital to pay suppliers.
UBS said Credit Suisse supply chain finance funds have made an offer to buy units or shares of the fund from fund investors.
“Fund investors who choose to accept the offer will be redeemed at 90% of the net asset value determined on February 25, 2021, less any payments made to fund investors since then through the newly created feeder sub-funds.”
Credit Suisse has returned some of the funds, although the fund’s disclosures show it owes about $2.5 billion.
“UBS AG expects to record a provision of approximately $0.9 billion on a consolidated basis in connection with the offering in 2Q24,” the company said in a statement.
The amount will be taken from the $4 billion the bank has set aside for possible legal and regulatory costs in its takeover of Credit Suisse.
The bank said this means the proposal is not expected to have a material impact on UBS’s financial results or capital adequacy tier 1 (CET1) ratio, a measure of financial strength.
“The proposal is intended to provide fund investors with certainty, accelerated exit from their positions and a high level of financial recovery,” UBS said.
($1 = 0.8905 Swiss franc)