UBS has agreed to sell $8 billion in loans to Apollo Global Management in a renegotiation of a deal Apollo originally struck with Credit Suisse, the bank said Wednesday.
The assets come from Credit Suisse’s securitized products business — which packaged debts such as mortgages and yacht loans, and sold them as securities. Credit Suisse had begun winding down the business in 2022, when it agreed to sell most of the assets to Apollo, which rebranded the unit as Atlas SP.
Under the 2022 deal, roughly $20 billion of securitized products assets would stay on Credit Suisse’s books, but Apollo would manage them.
But after UBS acquired Credit Suisse in March 2023, some of the bank’s executives were displeased with the fees — many of which were upfront — that Credit Suisse had agreed to pay Apollo to provide its investment management services, Bloomberg reported.
Credit Suisse disclosed in September that ending the investment management arrangement would result in a $600 million loss for the bank.
Wednesday’s revised deal hands UBS a net gain of about $300 million in this financial quarter. Credit Suisse, on the other hand, is expected to recognize a net loss of $900 million.
“As we execute on our integration plans, this is another example of our relentless focus on working with clients and counterparties to free up capital from non-core activities and reducing costs and complexity,” UBS CEO Sergio Ermotti said in a statement Wednesday.
Apollo CEO Marc Rowan, meanwhile, said the deal would not materially impact his firm.
“We are pleased to finalize the Atlas transition in partnership with UBS,” said Rowan said in a statement. “This caps off a quarter marked by record origination and capital raising for Atlas.”
Andreas Venditti, an analyst at Vontobel, said Wednesday’s deal “clearly looks positive for UBS.”
“The fact that UBS can book a gain confirms that it has conservatively marked the positions in the wind-down unit,” Venditti told Bloomberg.
UBS will retain the assets that are not being transferred to Apollo, a spokesperson for the bank told Reuters, but the value of those retained assets was not immediately clear.
Daniel Bosshard, an analyst at Luzerner Kantonalbank, said Wednesday’s deal indicates the Credit Suisse integration is going better than expected.
"The early praise is now very high, which is reflected in a sharp rise in the share price in recent months," Bosshard told Reuters.
UBS’s share price is up roughly 8% on the year.
“This leaves little room for disappointment," Bosshard said.
