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UBS has agreed to promote $8bn price of loans to personal capital group Apollo, because it winds down elements of its funding financial institution linked to the acquisition of Credit score Suisse final yr.
Apollo initially entered into an settlement with Credit score Suisse to buy its securitised merchandise division in 2022 in a deal that included a associated funding administration contract. Wednesday’s deal concludes that association.
The settlement is a giant enhance to UBS’s ambitions of considerably reducing again Credit score Suisse’s funding financial institution because it focuses on constructing out the mixed group’s wealth administration enterprise.
“As we execute on our integration plans, that is one other instance of our relentless concentrate on working with shoppers and counterparties to unencumber capital from non-core actions and decreasing prices and complexity,” stated UBS chief govt Sergio Ermotti.
The unique Credit score Suisse cope with Apollo led to the choice funding supervisor taking over one of many Swiss financial institution’s most worthwhile divisions, however one which required a number of capital.
The New York-based securitised merchandise enterprise packaged money owed, reminiscent of mortgages and loans for yachts, earlier than promoting them on as securities.
Apollo rebranded the enterprise as Atlas. The deal additionally included an settlement the place Atlas would supply funding administration companies to a number of the property Credit score Suisse retained.
Really helpful
However final yr UBS — after it took over its former rival Credit score Suisse — set about renegotiating the phrases of the Apollo deal, which it felt didn’t present good phrases for the financial institution.
This included scrapping the funding administration deal, which Credit score Suisse disclosed final yr would result in a $600mn loss for the financial institution.
On Wednesday, UBS stated the brand new association with Apollo — which included the switch of $8bn of senior secured financing amenities — would end in a $300mn internet acquire for the financial institution.
Apollo chief govt Marc Rowan stated the modifications to the cope with UBS had been impartial for the agency.
“This caps off 1 / 4 marked by file origination and capital elevating for Atlas, the place we’ve generated $24bn originations since inception and have secured capital to assist over $40bn of consumer property.”
