Switzerland's national flag flies under the logo of Swiss bank UBS in Zurich, Switzerland April 24, 2017. REUTERS/Arnd Wiegmann
SINGAPORE: UBS Group AG’s largest shareholder, Singapore’s sovereign fund GIC Pte Ltd, is slashing its ownership in the Swiss bank by offering a 2.4% stake worth about US$1.6bil (RM6.9bil).
UBS is managing the sale, according to an emailed statement from the bank Monday.
After completing the offering, GIC will hold less than 3% of the outstanding shares in UBS, according to the statement.
GIC had bought into Switzerland’s biggest bank early in the financial crisis, purchasing bonds that converted into stock when UBS needed capital to cover losses on subprime mortgage bonds.
In 2010 it became its largest investor after the securities were converted into shares. UBS has since given up its ambitions to become a top global investment bank, focusing instead on the more predictable business of wealth management.
GIC’s newly appointed chief investment officer, Jeffrey Jaensubhakij, said this year that the technology and health-care industries may offer some of the promising investment opportunities over the next decade, as muted global growth weighs on returns from traditional assets.
UBS shares reversed gains after the announcement, falling 1.3% to 16.61 francs (US$16.66) at the close in Zurich. GIC plans to sell 93 million shares through an accelerated bookbuilding to institutional investors.
The stock has risen 4.1% this year as the bank cuts costs and profitability in its core wealth management units picked up, though the share price remains well below where it traded when GIC first announced its investment in December 2007.
UBS at the time was raising capital amid a US$10bil writedown on subprime mortgage investments. The infusion wasn’t enough to avoid a bailout the following year, when UBS’s toxic investments were moved to a fund backed by the country’s central bank.
By the time GIC completed the conversion of its 11 billion Swiss francs (US$11bil) of notes, the stock had lost about two-thirds, though the unrealised loss was partly offset by interest payments. Losses on other bank investments made during the crisis, including Citigroup Inc, added to the wealth fund’s woes.
The statement didn’t show what stake GIC currently owns in UBS. The fund held 7.07% of the bank based on a Swiss stock exchange filing from 2014. UBS still reported that holding size in its 2016 annual report. - Bloomberg
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