In a strategic move aimed at shedding non-core assets following its acquisition of the collapsed banking group, UBS (UBSG.S) has finalized the sale of Credit Suisse’s securitized products business to Apollo Global Management.
Under the agreement, Apollo will acquire $8 billion worth of “senior secured financing facilities,” UBS announced on Wednesday. The deal is expected to yield a net gain of approximately $300 million for UBS in the first quarter of 2024.
“This mutually beneficial agreement aligns with UBS’s strategy of winding down and simplifying its non-core and legacy portfolio,” stated UBS in a released statement. CEO Sergio Ermotti emphasized that the deal would enable the release of capital tied up in non-core activities, as well as reducing costs and complexity within the business.
The successful completion of this transaction signals a positive step in the integration of Credit Suisse into UBS, following the government-sponsored rescue of Credit Suisse in March of the previous year. Analyst Daniel Bosshard from Luzerner Kantonalbank remarked that the Apollo deal indicates a smoother integration process than initially anticipated.
“The early praise is now very high, which is reflected in a sharp rise in the share price in recent months,” Bosshard commented, noting the increased investor confidence. “This leaves little room for disappointment.”
Despite the positive developments, UBS shares saw a slight decline of about 0.46% in early trading in Zurich on Wednesday, although they have risen approximately 8% since the beginning of the year.
Credit Suisse had already initiated the winding down of its securitized products business in 2022, with plans to transfer approximately $20 billion of remaining assets to Apollo for management. UBS will retain the assets not included in the Apollo deal, although the exact value of these assets remains undisclosed at present.
