UBS agreed to sell loans worth $8bn to private capital group Apollo as it wind down its investment bank related to the acquisition of Credit Suisse in 2013.
Apollo originally agreed to buy Credit Suisse’s securitised product division in 2022. The deal included an investment management contract. The deal announced on Wednesday concludes the arrangement.
The agreement gives UBS a major boost in its ambitions to significantly reduce Credit Suisse’s Investment Bank, while it concentrates on growing the combined group’s Wealth Management business.
UBS Chief Executive Sergio Ermotti said: “We are executing on our integration plan and this is an example of how we work with clients and counterparties in order to reduce costs and simplify non-core activities, and free up capital.”
Credit Suisse’s original deal with Apollo resulted in the alternative investment manager assuming one of the most profitable divisions of the Swiss bank, but it required a large amount of capital.
Securitised Products, based in New York, packaged debts such as mortgages or loans for yachts before selling them as securities.
Atlas was the new name for Apollo. Atlas was also contracted to provide investment management for some of the assets Credit Suisse retained.
Last year, after UBS acquired its former rival Credit Suisse, it renegotiated the terms of the Apollo agreement. It felt that the deal did not offer good terms to the bank.
Credit Suisse announced last year that it would suffer a loss of $600mn if the deal for investment management was not scrapped.
UBS announced on Wednesday that the new agreement with Apollo, which included the transfer $8bn in senior secured financing facilities, would result to a net gain of $300mn for the bank.
Marc Rowan, chief executive of Apollo, said that the changes made to the UBS deal were neutral for his firm.
Atlas has generated over $24 billion in originations and secured capital for assets worth more than $40 billion since its founding.