UBS sets aside $1.2b to repay investors in collapsed Greensill funds

ZURICH - UBS will set aside around US$900 million (S$1.22 billion) to repay investors in Credit Suisse funds that were linked to collapsed supply chain financing firm Greensill Capital, accounting for 90 per cent of what they are owed, UBS said on June 17.

The bank has been seeking to resolve issues it inherited when it acquired Credit Suisse in 2023 after a string of financial problems brought down its long-time rival.

Among them was a 1.6 billion Swiss franc (S$2.43 billion) loss due to the collapse of US$10 billion in supply chain finance funds linked to Greensill in 2021.

Also known as reverse factoring, the supply chain finance deals, portrayed as low-risk, allowed companies to get cash from banks and funds such as Greensill Capital to pay suppliers.

UBS said the Credit Suisse Supply Chain Finance Funds have made an offer to buy back units or shares in the fund from the fund’s investors.

“Fund investors who choose to accept the offer will be redeemed at 90 per cent of the net asset value determined on Feb 25, 2021, net of any payments made to the fund investors since then, through newly established feeder sub-funds,” UBS said in a statement.

Credit Suisse has recovered some of the funds, although around US$2.5 billion is outstanding, fund disclosures show.

“UBS expects to record a provision of around US$900 million on a consolidated basis in connection with the offer in the second quarter of 2024,” the bank said. The amount will be taken from the US$4 billion it set aside for potential litigation and regulatory costs when it took over Credit Suisse.

UBS said that means the offer is not expected to have a material effect on UBS’ financial results or common equity tier-one capital ratio, a measure of financial strength.

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