UBS offloads subprime securities

Swiss bank UBS has closed a deal to sell BlackRock $22 billion (£11.2 billion) of subprime securities for $15 billion (£7.6 billion).

UBS was the worst-affected European bank by the credit crunch, and has written off $37 billion (£18.8 billion) so far.

Today’s deal will see it offload subprime and Alt-A – a grade above subprime - US residential mortgage-backed securities to investment company BlackRock, reducing its exposure to so-called ‘toxic’ assets.

Group chief executive of UBS, Marcel Rohner, said: “Risk reduction remains a critical part of our ongoing financial restructuring and this sale is a big step towards further reducing our positions in this asset class.”

The bank said it has lent $11.25 billion (£5.7 billion) to BlackRock to part finance the deal, with the remaining $3.75 billion (£1.9 billion) funded by BlackRock investors.

UBS said earlier in May that the structure of the deal will allow it to take advantage of any uplift in the value of the assets, but the sale will take them off its balance sheets.

The bank also announced it will cut up to 5,500 jobs to cope with the huge losses it has incurred since the subprime crisis hit.

The job losses are expected to go through by mid-2009.