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UBS sells $8 billion of Credit Suisse assets to Apollo

Published 03/27/2024, 06:14 AM
Updated 03/27/2024, 03:21 PM
© Reuters. FILE PHOTO: Logos of Swiss banks Credit Suisse and UBS are seen before a news conference in Zurich Switzerland, August 30, 2023.  REUTERS/Denis Balibouse/File Photo

ZURICH (Reuters) - UBS has sealed the sale of Credit Suisse's securitised products business to Apollo Global Management (NYSE:APO) as part of efforts to shed non-core assets after its takeover of the collapsed banking group.

Apollo will purchase $8 billion of "senior secured financing facilities", UBS said on Wednesday, adding that it expects to make a net gain of about $300 million from the deal in the first quarter of 2024.

The agreement is a renegotiation of the deal Credit Suisse had reached with the U.S. buyout fund in the Swiss banking group's last-ditch attempts at a revamp to avoid collapse.

"This mutually beneficial agreement aligns with UBS's strategy of winding down and simplifying its non-core and legacy portfolio," UBS said on Wednesday.

UBS Chief Executive Sergio Ermotti said the deal would free up capital from non-core activities and reduce costs and complexity in its business.

Credit Suisse had to be rescued in March last year in a government-sponsored operation.

Luzerner Kantonalbank analyst Daniel Bosshard said the Apollo deal was a sign that the Credit Suisse integration was going better than expected.

"The early praise is now very high, which is reflected in a sharp rise in the share price in recent months," Bosshard said.

"This leaves little room for disappointment."

UBS shares are up about 8% so far this year. They were down about 0.46% in early trading in Zurich on Wednesday.

In 2022, Credit Suisse had already begun the process of winding down its business of securitising products such as mortgages.

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Under that plan, about $20 billion of remaining assets were to stay on the books of Credit Suisse but be managed by Apollo.

UBS will retain what is not being transferred to Apollo, a spokesperson for the bank said. The value of the former assets remaining with UBS was not immediately clear.

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