UBS to book $900m provision over Greensill supply financing funds

17th Jun 2024 09:47

(Sharecast News) - Swiss banking giant UBS announced on Monday that it expected to book a provision of about $900m related to Credit Suisse's funds, tied to the collapsed supply chain financing firm Greensill Capital.

The financial adjustment came in the wake of UBS's acquisition of Credit Suisse last year, following its rival's financial turmoil.

Credit Suisse previously incurred a loss of CHF 1.6bn (£1.42bn) due to the collapse of $10bn in supply chain finance funds connected to Greensill in 2021.

According to Reuters, the funds were involved in supply chain finance deals, also known as reverse factoring, which allowed companies to receive cash from banks and funds like Greensill to pay suppliers.

UBS said the Credit Suisse supply chain finance funds had extended an offer to redeem fund units.

Investors who accepted the offer would be redeemed at 90% of the net asset value as of 25 February 2021, after accounting for any payments made since then.

The redemptions would be managed through newly-established feeder sub-funds.

Despite the significant provision, UBS said the financial impact of the move would not materially affect the bank's financial results or its Common Equity Tier 1 (CET1) capital ratio.

The aim of the offer was to provide fund investors with certainty, a quicker exit from their positions, and a high level of financial recovery.

At 1033 CEST (0933 BST), shares in UBS Group were up 1.52% in Zurich at CHF 27.33.

Reporting by Josh White for Sharecast.com.