Breakingviews | UBS/BlackRock

Considered view

21 May 2008 12:20

Adieu or au revoir?

By Mike Verdin

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Context News

UBS, the Swiss bank, said it had sold $15bn of US residential-backed assets to a distressed asset fund managed by BlackRock, the US asset manager.

BlackRock has provided $3.8bn of equity to the fund, with the balance of the assets purchased by an $11.2bn loan from UBS.

The nominal value of the assets, which are mainly backed by subprime and Alt-A mortgages, is $22bn.

Despite taking a $7bn hit on the assets it has sold to BlackRock, the Swiss bank is on the hook if they fall another $3.8bn as it is lending BlackRock $11.2bn. Even so, the deal gives a fillip to UBS’s detox programme - roughly halving the assets scheduled for its "bad" bank.

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Adieu or au revoir?

Context News