UBS buys back $3.8bn rescue fund

UBS building

Things must be looking up for UBS.

UBS, agreed to pay $3.8bn to buy back the fund for toxic assets set up by the central bank in 2008 as part of a bailout.

Bloomberg reports that the Swiss National Bank said the price corresponds to its contractual share in the fund’s equity at the end of September, according to an e-mailed statement Friday.

Under the agreement, UBS paid the Zurich-based central bank $1bn plus 50% of the remaining value. At the end of 2012, the SNB would have received $3.27bn under the same formula.

The Stability Fund was established in October 2008 as part of measures to stabilize UBS and bolster the Swiss financial system. UBS spun off $38.7bn of risky assets into the fund, while the government provided $6.6bn of equity and the SNB made a loan to support the assets as they were being run down. The government sold its investment in UBS for a profit of $1.32bn.

'The StabFund based its work on the intrinsic values of the assets, which were calculated from the future cash flows to be expected', the SNB said in the statement. 'When the market situation was good, assets were sold rapidly, while restraint was exercised when market setbacks were experienced'.

To access the complete Bloomberg article hit the link below:

UBS Agrees to Buy Back Rescue Fund for $3.8 Billion

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image: © Martin Abegglen

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