SWITZERLAND - Swiss bank UBS has sold $15bn (€9.7bn) worth of US residential mortgage-backed securities  to a newly-created distressed asset fund.

The fund will be managed by BlackRock and UBS' assets - mainly subprime and Alt-A - now have a nominal value of approximately $22bn in the fund.

"The fund purchased the securities using approximately $3.75bn in equity raised by BlackRock from investors and a multi-year collateralised term loan of approximately $11.25bn provided by UBS," the bank noted in a statement.

The transaction is now closed so no further details on the deal or the fund are being revealed. BlackRock also refused to comment on whether the new fund was open to other companies and their subprime assets as well.

UBS' subprime-related holdings incurred losses of $18.7bn in 2007 and $11.5bn in the first quarter of 2008.

Because of the extent of these losses, the Swiss banking commission has allowed UBS - for the first time in its history - to disclose to the public details of the report on the losses the bank filed with the commission.

Pressure to do so came from various investors including Swiss shareholder rights group Ethos. (See earlier IPE story: Ethos halts court action as UBS gives in)

Switzerland-based Green MP Martin Bäumle said the losses make UBS a perfect example of what he considers to be a "superficially sustainable" investment: "What use is a bank with an ISO certificate which invests in solar energy if it makes losses of almost $40bn during the subprime crisis."

His comments made at the retirement provision fair in Zurich last week were greeted with cheers from the audience.

"Risk reduction remains a critical part of our ongoing financial restructuring and this sale is a big step towards further reducing our positions in this asset class, Marcel Rohner, group chief executive of UBS, said in a statement on the subprime asset sale.

The bank recently announced a series of changes to the management of the investment banking division as Daniel Coleman becomes global head of equities and his former deputy John Wall transitions to a new position as global head of proprietary trading.

Both will continue to report to Jerker Johansson, chairman and CEO of UBS' investment
bank, who in turn will take on additional responsibility for fixed income, currency and commodities (FICC) on an interim basis.

This step follows Andre Esteves', the current head of the FICC division, to focus full-time on his role as chairman and CEO of UBS Latin America, based in Brazil.

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