Who is the mystery investor who is bailing out UBS bank?

galwaybabe

Not sure if this is the right place to post this (feel free to move it mods). Does anyone have any theories as to who the mystery Middle Eastern investor is who has clubbed together with Singapore government to bail out the troubled Swiss bank UBS. I have a theory myself but want to see what others think before posting
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UBS, the fourth largest European bank, yesterday became the second major global bank to get an injection of funds from a so-called sovereign investment fund (SWF), based in Asia or the Middle East.

The Swiss bank said it has sold a 10.5-per-cent stake to the Government of Singapore Investment Corp. and an unidentified Middle East investor for $11.5-billion (U.S.).

oscarBravo

Moved from Politics - move again if this isn't the appropriate forum, ta.

xebec

This is the best place for the thread.

According to BBC news the investor from the Middle East is the Oman Government. Story here. The stakes are reportedly $9.7billion from the Government of Singapore Investment Corporation and $1.7billion form the Middle East.

It's just another story in a bad year for UBS, this just seem to be getting worse for a bank who consider themselves relatively conservative in their investment strategies. Brings back memories of LTCM.

I have some friends who work for UBS and I don't expect them to be overly happy with their bonuses this year! Although, you never know, UBS have always looked after their people.

justfortherecor

Probably just another sovereign fund in the Middle East that didnt wish to be identified.
Crazy the amount of banks these days that have increasingly bigger number of large Middle East/Asian shareholders:

UBS: Govt of Singapore, Middle Eastern Sov Fund
Citi: Abu Dhabi Sov Fund
Barclays: Bank of China
Fortis: Ping An
Standard Chartered: Temasek Holdings

To think that a bank the size of UBS needed to re-capitalize its balance sheet to the tune of $17.5bn is amazing. Financed at 9% as well, and Citi got their $7.5bn for 11% - almost junk bond levels.

This is getting ridiculous. The two banks employees shouldn't be bloody expecting bonuses at all this Xmas!

daveirl

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justfortherecor

Looks like we can add Morgan Stanley to the list of banks requiring capital 'top ups' from the orient.

A worrying trend.

daveirl

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justfortherecor

daveirl wrote: »

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Predominantly that some of the world's foremost banks are in such shoddy shape and requiring these recapitalisations from sovereign funds.
Shows how exposed the financial sector has allowed itself to become to these dodgy CDOs by chasing the quick buck.

In terms of ownership issues, nothing too problematic with the fact that most of these funds are Middle Eastern/Asian. However, they are effectively government owned funds and that may raise concerns in the future about the role of the Chinese and Middle Eastern governments in the major western banks. If they try to influence the board (which they claim not to at the moment) it should be interesting to see what happens.

justfortherecor

Temasek are reportedly in talks with Merrill Lynch about the possible acquisition of a stake.

Link: Temasek and Merrill

Temasek are a very interesting fund, they achieve Warren Buffet-like levels of return. 18% compounded annually since their inception.

justfortherecor

justfortherecor wrote: »

Temasek are a very interesting fund, they achieve Warren Buffet-like levels of return. 18% compounded annually since their inception.

Buffet manages to do it without having the resources, clout and tax income of a country behind him.

homer911

The Saudi-Arabian Monetary Agency (SAMA) has provided €6.6B in funding to UBS to shore up its Balance Sheet. This represents 2% of the bank
(as reported on efinancialnews.com)

damnyanks

If you're cash rich this is the perfect time. Any bank that was trying to live off their own structures as opposed to standard charges got screwed. The best was morgan stanley, 90% of their loss was down to 1 desk ****ing up.

They all followed bear stearns who were raking it in despite being tiny and a small client base outside of the states, if you've followed any of the investment banks over the last few years you'll of noticed they bought so many mortgage firms to help start the pipeline of dodgy structures.

As far as who bought into UBS I think any middle eastern investment will cause problems as its one of the last european thinking banks around. They're quick to drop people as they did a few years ago and have already done so last year (1500 was it?). If the investor doesnt grow their share of the bank then it shouldnt be a problem. Chances are they just saw a good opportunity - anything to do with fixed income did crap last year overall due to the credit crisis, equities and banking still kept bringing in major cash

justfortherecor

Good point, we're seeing a lot of Eastern activity at the moment and sure why not, its the opportune time to use their massive foreign reserves to get some bargains in some major western establishments.

Interesting piece in the FT today regarding another Chinese Govt investment vehicle called SAFE investing in 3 Australian banks. Seemed as though the way they went about it was quite dubious and certainly non-transparent.

SAFE invests in Australian BanksLink:

Surely Japan should set up a Sovereign fund as well and seek some better returns from their massive reserves? Would be a good time to do it, higher return-seeking investments by the Government would help to convey their desire for the greater public to invest their savings in more attractive investment options as well?