Swiss bank UBS AG (NYSE:UBS) announced today that it was planning to buy back up to $2.37 billion (1.75 million euros) worth of bonds. This current tender offer is for five series of subordinated bonds in Swiss francs, euros or pounds, and six senior unsecured bonds denominated in francs, euros, Italian lira or pounds. The tender offer will expire on December 13.
Earlier UBS bond buyback
UBS AG (NYSE:UBS) also bought back around 5.1 billion francs ($5.6 billion) in 14 senior unsecured bonds a few months ago. In a statement about the buyback, the company said, “The transaction is consistent with our proactive approach to reducing our balance sheet and future interest expense while maintaining our strong liquidity, funding and capital position.”
The statement continued to say that UBS expects to incur a small loss with the buyback, which is expected to have an “insignificant” effect on its common equity ratio. The statement also said the costs will be more than recovered through reducing future interest expenses.
UBS urged to raise capital
According to the New York Times, UBS AG (NYSE:UBS), Switzerland’s largest financial institution, has reportedly been told confidentially by government regulators to increase its liquid assets so as to be better prepared for legal and/or compliance issues. UBS is one of several European banks being quietly urged to raise capital in the near term. Completing the bond buyback is anticipated to decrease the firm’s capital ratio somewhere between 0.2 and 0.5%.
Investors were apparently unperturbed at the news. Common shares of UBS were up fractionally on Monday, trading at $19.04, up .21% as of 10:53 AM EST.