UBS offers share swap for new holding company

Switzerland’s largest bank UBS is setting up a holding company to allow its operations to be broken up more easily in the event of a financial crisis.

The bank announced on Monday that it was launching a share exchange offer to establish UBS Group AG.

Shares in UBS AG will be exchanged with those of the new holding company on a one-to-one basis, with the new shares carrying the same voting and economic rights, the bank said.

Once the transaction is completed a capital return of at least 0.25 francs per share is expected to be proposed to shareholders of US Group AG.

The bank said establishing the holding company is intended to “substantially improve UBS’s resolvability in response to evolving global ‘too-to-fail’ requirements".

It said it expected the new holding company structure would allow it to qualify for lower capital requirements, permitting the rebate to shareholders.

UBS had to be bailed out by the Swiss federal government following the 2008 financial crisis because of massive multi-billion-franc losses linked to the US residential mortgage market.

The acceptance period for the share exchange offer is expected to start on October 14th and to end on November 11th.

Upon completion of the exchange, UBS Group shares will be listed on the SWISS Six Exchange and the New York Stock Exchange while UBS AG shares will be delisted.

In further restructuring, UBS said it planned to set up a banking subsidiary in Switzerland by mid-2015 and a US “intermediate holding company” by mid-2016.

The bank said the changes would “not affect its strategy or how it serves its clients”.

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