UBS sells sub-prime assets at $7 billion loss

by Gill Montia

Story link: UBS sells sub-prime assets at $7 billion loss

UBS, the Swiss investment bank that has so far recorded larger losses from the credit crisis than any other financial institution, has sold some of its mortgage-backed securities to BlackRock, the fund manager.

The disposal has been made for $15 billion representing a $7 billion loss on the nominal value of the loans.

The move forms part of a financial restructuring of the group, aimed as reducing risk. However, it is understood that UBS has lent BlackRock a substantial proportion of the purchase price.

The bank had written down around $37 billion prior to the sale and analysts estimate that its exposure to US sup-prime mortgage debt now stands at around $17 billion.

UBS’s difficulties have led to speculation that it could be a takeover target and last month, Luqman Arnold, a former chairman of the bank, launched a shareholder campaign to break-up the group.

Barclays is rumoured to be interested in acquiring parts of the business.