Swiss National Bank approves UBS buyback of toxic fund

UBS has come a step closer to buying back the stabilisation fund used to offload its toxic assets when it was bailed out five years ago.

The Swiss National Bank said UBS had paid back the bailout loan it was granted five years’ ago and is now free to exercise its option to acquire the StabFund’s equity.

The Swiss government sold its nine per cent stake in UBS a year after bailing it out in 2008 for a CHF1.2bn profit, but the bank has been offloading around $38.7bn of illiquid assets into the National Bank-managed fund ever since. The SNB has now made the fund profitable.

UBS said at the end of July it expects to exercise its option to buy back the fund in the fourth quarter of 2013, which it hopes will boost its capital in the latter part of the year.