UBS allocates funds to save Credit Suisse, but issues remain post

On Monday,Foreign exchange bank dealers UBS announced that it would allocate approximately $900 million to compensate Credit Suisse fund investors linked to the now-defunct supply chain finance company Greensill Capital, covering 90% of their entitlements.

Since acquiring long-time rival Credit Suisse, which collapsed due to a series of financial issues last year, UBS has been working to resolve inherited problems.

One of these issues stems from the collapse of a $10 billion supply chain finance fund related to Greensill in 2021, resulting in a loss of 1.6 billion Swiss francs ($1.8 billion).

Supply chain finance, also known as reverse factoring, is depicted as a low-risk transaction that allows companies to obtain cash from banks and funds like Greensill Capital to pay suppliers.

UBS stated that Credit Suisse's supply chain finance fund has made a buyback offer for the units or shares to the fund's investors.

"Investors in the fund who choose to accept the offer will redeem at 90% of the net asset value determined on February 25, 2021, less any amounts paid to the fund's investors since then, through a newly established guiding sub-fund."

Disclosures indicate that Credit Suisse has recovered part of the funds, but about $2.5 billion remains unrecovered.

In its statement, UBS mentioned, "A comprehensive provision of around $900 million will be recorded for this offer, expected in the second quarter of 2024."

This amount will be deducted from the $4 billion UBS had set aside for potential litigation and regulatory expenses when taking over Credit Suisse.

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