(AFP) – May 21, 2008
ZURICH (AFP) — Swiss banking giant UBS said on Wednesday it had disposed of US mortgage-related assets for 15 billion dollars (9.58 billion euros), a price that is 30 percent below the nominal value, to a fund managed by US investment group BlackRock.
"Risk reduction remains a critical part of our ongoing financial restructuring and this sale is a big step towards further reducing our positions in this asset class," said Marcel Rohner, chief executive of UBS, the bank which has suffered most from the subprime crisis.
Rohner had earlier confirmed the sale, but did not reveal details.
The positions with a nominal value of about 22 billion dollars were sold to the newly created asset fund at a discounted price of 15 billion dollars in line with current market valuations.
The bank added that most of the positions sold are subprime and Alt-A mortgage backed securities -- which is in between prime and subprime, and the remainder is prime.
The bank also said the fund purchased the securities using about 3.75 billion dollars in equity raised by BlackRock from investors and a multi-year collateralised term loan of about 11.25 billion dollars provided by UBS.
The transaction has closed, added the bank.
In early morning trade, UBS opened up 0.19 percent at 31.80 Swiss francs, in line with a market which is also up 0.17 percent.
UBS, which has been forced to take massive writedowns due to the crisis, reported a net loss for the first three months of the year of 11.54 billion Swiss francs.
It has written down over 37 billion dollars since the subprime crisis started and earlier said it could cut up to 5,500 more jobs within the next year.
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