Wed, Mar 27th 2024
UBS seals the deal with Apollo, concluding the spin-off of the ex-CS securitised products division, enhancing capital efficiency and simplifying operations.
The major bank UBS is completing the spin-off of the former CS business with securitised products. To this end, it has agreed with the US company Apollo to terminate the previous management agreements.
This is the final step in the spin-off of the Securitized Products Group (SPG), UBS announced on Wednesday. Under the terms of the agreement, Apollo will acquire USD 8 billion of senior secured financing facilities from the big bank.
Prior to the takeover by UBS, Credit Suisse had sold large parts of the SPG business to the private equity company. A significant part of the securitised products business had gone to companies and funds managed by Apollo Global Management companies. The remainder was retained by CS.
UBS intends to wind up the part of the former CS business with securitised products that now exceeds the 8 billion.
UBS has pooled all areas that are to be divested in the course of the CS integration and restructuring in a wind-down unit called LCL (Non-Core and Legacy). A large part of the former Credit Suisse investment banking business is to be wound up.
UBS Group expects the now announced termination of the SPG agreements and the assignment of the financing facilities to result in a net gain of around USD 300 million for the first quarter of 2024. At the same time, Credit Suisse AG will have to post a net loss of around 900 million dollars. This is also due to the different accounting standards of UBS (IFRS) and the former CS (US GAAP).
Bloomberg had speculated in September that UBS management was considering renegotiating parts of the complex deal with Apollo. UBS is unhappy with some of the terms of the sale to Apollo, it said, citing people familiar with the matter. In particular, fees that Apollo received for managing the securitisation that remained on Credit Suisse’s books.
The agreements on the CS securitisation business were reached under time pressure in autumn 2022. It was part of the ultimately unsuccessful last attempts by CS management to regain the trust of investors.
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