UBS to Restructure Loans and Offload Volatile Loans to APAC Region Customers

UBS Group AG intends to exit billions of dollars in loans to Credit Suisse clients in the Asia Pacific region, as the Swiss bank works to mitigate the defunct lender's risks to its profitability and reputation.

According to people familiar with the matter, the bank intends to wind down or sell off the majority of Credit Suisse's more complex and higher-risk structured loans in APAC.

According to the sources, the riskier assets will be placed in the so-called "Non-Core Unit" for businesses that UBS does not want. The bank is likely to keep less complicated loans made against liquid collateral — so-called Lombard loans — they said, declining to be identified because they were discussing private matters.

The move is part of UBS's broader efforts to ensure that the businesses it acquired from its bankrupt rival adhere to its more conservative risk-taking approach. UBS has already stated that it intends to downsize Credit Suisse's investment bank and subject its bankers to a "culture filter" in order to eliminate undesirable practises.

More information on what will be included in the wind-down unit is expected during the combined bank's second-quarter earnings report on Aug. 31. According to a person familiar with the matter, UBS will phase out non-core assets while maintaining key relationships. The process will also free up capital for use in other areas of the bank, according to the source.