Swiss bank UBS has paid $3.762 billion (CHF3.44 billion) to buy back the stabilisation fund (StabFund) set up five years ago to bail it out during the financial crisis, the Swiss National Bank (SNB) announced on Friday.
The rescue of UBS and the winding up of the StabFund ends a painful chapter in the history of the Swiss financial sector. It has left the SNB with a total $5.4 billion (CHF5 billion) windfall from the bailout, also taking into account $1.6 billion interest payments made from the StabFund.
The StabFund absorbed $38.7 billion of UBS’s toxic debt related assets at the end of 2008, underpinned by a $25.8 billion loan from the central bank. UBS paid back this loan in August, allowing it to buy back $6.5 billion of assets remaining in the fund that had not been sold off by the SNB.
Under the terms of the buyback agreement, UBS must make an upfront payment of $1 billion to the SNB plus half the value of the remaining StabFund assets.
«Successful conclusion»
«For the SNB, the transfer of the StabFund to UBS represents the successful conclusion of a challenging undertaking and one which, for the SNB, was out of the normal run of business,» the SNB said in a statement, adding that the repayment would have a favourable impact on its 2013 annual result.
«However, attaining a profit was never an objective in its own right. The prime reason for the establishment of the StabFund was its contribution to strengthening the Swiss financial system,» added the SNB.
The news of the StabFund buyback was expected as UBS had announced this intention in July. The SNB gave its approval in August once the loan was finally repaid.
The Swiss government also made more than CHF1 billion from its part in UBS’s bailout rescue, having bought and then sold a sizeable stake in the struggling bank to grant it emergency liquidity.