UBS Agrees to Offload $8 Billion in Loans to Apollo Global Management

UBS reaches a significant deal with Apollo Global Management to transfer $8 billion in loans, reshaping the securitized products landscape.

UBS has reached an agreement to offload $8 billion in loans to Apollo Global Management, marking a significant renegotiation of a deal originally struck between Apollo and Credit Suisse. The loans in question stem from Credit Suisse's securitized products business, which involved the packaging and sale of debts such as mortgages and yacht loans as securities. In 2022, Credit Suisse began winding down this business and subsequently agreed to sell the majority of its assets to Apollo, which rebranded the unit as Atlas SP. While approximately $20 billion of securitized products assets were set to remain on Credit Suisse's balance sheet under the initial deal, Apollo was slated to take over management responsibilities.

However, following UBS's acquisition of Credit Suisse in March 2023, certain executives at the bank expressed dissatisfaction with the fees, particularly the upfront charges, that Credit Suisse had agreed to pay Apollo for its investment management services. In September, Credit Suisse disclosed that terminating the investment management arrangement would lead to a $600 million loss for the bank. The revised deal announced on Wednesday will result in a net gain of approximately $300 million for UBS in the current financial quarter, while Credit Suisse is expected to incur a net loss of $900 million. As a result of this development, UBS's share price has risen by around 8% since the beginning of the year.

The sale of $8 billion in loans to Apollo Global Management represents a significant strategic move for UBS following its acquisition of Credit Suisse. The renegotiated deal is expected to have a notable impact on the financial performance of both UBS and Credit Suisse in the coming quarters.