UBS repays Swiss bailout loan, buys back assets

PHOTO: UBS repays Swiss bailout loan, buys back assets

ZURICH - UBS said it will repay a loan and buy back equity in a fund set up as part of its 2008 bailout, a move the Swiss bank expects will bolster its capital later this year.

The move draws a line under the Swiss government's rescue of UBS nearly five years after the bank threatened to collapse under the weight of more than US$50 billion (S$63.4 billion) in losses on mortgage securities.

The government took a nine per cent stake in UBS as part of the bailout, which saw UBS receive a 6-billion-Swiss-franc shot in the arm. Switzerland sold the stake less than a year later at a 1.2 billion franc profit.

However, roughly US$38.7 billion in toxic former UBS assets were tricker to handle. Offloaded to a fund managed by the Swiss National Bank as part of the bailout, the central bank has been selling them down since. Last year, the fund earned the SNB 938.7 million francs.