UBS AG plans to sell US$15 billion of assets to a fund managed by BlackRock Inc.
The sale of subprime and so-called Alt-A home loans probably will be completed by the end of June, Chief Executive Officer Marcel Rohner said yesterday.
BlackRock, the New York-based manager of almost US$1.4 trillion of assets, is seeking cash from investors to create a new entity that would hold and eventually sell the mortgage assets of Zurich-based UBS as the markets recover. BlackRock has held similar discussions with financial institutions around the world that are reeling from more than US$300 billion in mortgage-related losses and writedowns.
Creating a so-called bad bank owned by investors to hold and manage distressed assets is one way for banks to reduce losses so they can resume lending and revive revenue and profits amid the worst US housing slump since the Great Depression.
BlackRock will target returns of more than 15 percent for the UBS fund, according to insiders. The arrangement with BlackRock, led by CEO Laurence Fink, will help the 43-year-old Rohner fulfill a pledge he made to employees to curb losses at the fixed-income unit.
Rohner has been under pressure since last year to show he can shore up confidence.
Shareholders have said it would take years for the bank to repair its reputation. Losses at UBS have led to the departures of Chairman Marcel Ospel, CEO Peter Wuffli, finance chief Clive Standish and investment banking head Huw Jenkins.
UBS first disclosed losses from the US mortgage market last May when the company shut down a hedge fund after it lost 150 million francs in the first quarter of 2007.