Financial institution UBS to allocate approximately $900 million to repay investors who were involved with Greensill Capital
In a significant move, UBS has announced plans to repay a substantial portion of the nearly $2.5 billion that remains stuck in investment funds tied to the collapsed Greensill Capital. The offer, which began on Monday and will extend through July 31, aims to provide relief to investors who have been affected by the financial fallout of Greensill's collapse in 2021.
The details of the repayment offer, however, are not yet fully disclosed. UBS has not revealed the specific terms of the settlement or the process through which it will recoup the Greensill-tied dollars. The bank has also not provided any quantified financial impact on its own financial position as a result of this offer.
It is important to note that UBS's involvement with Greensill Capital dated back to before 2021, and the funds faced liquidity issues following the collapse of the company. The bank had previously offered to reimburse investors, but the exact nature of this offer and its implications for UBS's financials remain unclear.
The UBS-Greensill saga is not the only challenge the bank has faced in recent years. In July 2023, the Federal Reserve fined UBS $268.5 million for "unsafe and unsound counterparty credit risk management practices" between Credit Suisse and Archegos. Another Credit Suisse client, Archegos Capital Management, defaulted on $5.5 billion in trading positions in March 2021. These incidents prompted leadership changes at Credit Suisse's executive board.
UBS expects to pay as much as $4 billion in legal liabilities as a result of acquiring Credit Suisse. The investment in the supply chain finance funds, which include the Greensill-linked funds, will be managed as part of UBS's non-core and legacy portfolio.
Despite these challenges, UBS has been making efforts to address the issues and move forward. Clients have already received more than $7 billion in trapped funds since Greensill collapsed. The bank also plans to set aside approximately $900 million in the second quarter to reimburse investors in Credit Suisse funds linked to Greensill Capital. However, the bank has clarified that these payouts will not affect UBS's financial results or capital position.
For the most accurate and up-to-date information, it is recommended to consult UBS's official press releases and financial statements, as well as credible financial news sources for detailed coverage on this matter.
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