LONDON â€" In the latest sign of a strengthening environment for European banks, the Swiss bank UBS said Friday that it paid $3.76 billion to Switzerland’s central bank to repurchase the remaining value of a portfolio of troubled assets taken off its books during the financial crisis.
As part of its rescue plan five years ago, UBS spun off $38.7 billion in illiquid or distressed loans, securities and derivatives into a fund backed by the Swiss government and the Swiss National Bank. The underlying assets in the fund have been sold over time.
The fund, known as the StabFund, repaid a final $1 billion loan to the Swiss central bank earlier this year, a condition for UBS to be able to repurchase the remaining assets. UBS had announced plans in July to buy back those assets.
The $3.76 billion payment represents the Swiss National Bank’s share of the remaining equity value of the fund as of the end of September. The fund’s equity value was split between the central bank and UBS.
Buying back the fund is another step in a plan by the chief executive of UBS, Sergio P. Ermotti, to transform the bank into a smaller, more profitable firm focused on wealth management and to move past its bailout.
Last month, UBS announced improved profit of 577 million Swiss francs, or about $630 million, in the third quarter, but its results continued to be challenged by charges for litigation and regulatory concerns.
The bank had reported a loss of 2.13 billion francs for the third quarter of 2012, after it booked billions of dollars related to its debt and the restructuring of its investment bank. The bank also cut 10,000 jobs last year as part of an overhaul designed to shift its focus from more risky trading activity in its investment bank.
