UBS to book $900 million provision linked to inherited Greensill funds

FILE PHOTO: A logo of Swiss bank UBS is seen in Zurich, Switzerland March 29, 2023. REUTERS/Denis Balibouse/File Photo

ZURICH (Reuters) -UBS expects to record a provision of roughly $900 million on Credit Suisse's funds linked to collapsed supply chain financing firm Greensill Capital, the Swiss bank said on Monday.

UBS acquired Credit Suisse last year after its longtime rival imploded following a string of financial problems.

Among them, Credit Suisse racked up a 1.6 billion Swiss franc ($1.80 billion) loss due to the collapse of $10 billion in supply chain finance funds linked to Greensill in 2021.

At the centre of the ill-fated scheme were supply chain finance deals, also known as reverse factoring, where companies can get cash from banks and funds such as Greensill Capital to pay suppliers.

"The Credit Suisse Supply Chain Finance Funds have made an offer to redeem fund units," UBS said in a statement.

"Fund investors who choose to accept the offer will be redeemed at 90% of the Net Asset Value determined on 25 February 2021, net of any payments made to the fund investors since then, through newly established feeder subfunds."

"UBS AG expects to record a provision of around $0.9 bln on a consolidated basis in connection with the offer in 2Q24."

The offer is not expected to have a material effect on the financial results or CET1 capital of UBS, the bank said.

"The offer aims to give fund investors certainty, an accelerated exit from their positions and a high level of financial recovery," UBS said.

($1 = 0.8905 Swiss francs)

(Reporting by Noele Illien, editing by Andrey Sychev)