UBS stake 'set to cost GIC $5bn'

5 March 2010

A stake in UBS is set to lose the Government of Singapore Investment Corp (GIC) more than $5 billion, it has been reported.

GIC invested $10.18 billion into the Swiss bank two years ago in the form of a mandatory convertible bond but is set to lose in the region of $5.1 billion on its share, reports the Financial Times.

However, GIC has stated it remains confident in the future of UBS and plans to hold on to its stock in the financial institution for "two or three decades".

UBS and Citigroup received a total of $18 billion from GIC as the banks sought additional capital following subprime writedowns.

The timing of the investment was criticized by analysts as shares in both banks continued to fall, but GIC has subsequently made a $1.6 billion profit from selling half of its stake in Citigroup.

Last month, UBS reported pre-tax profits for the fourth quarter of 2009 of $1.1 billion – a turnaround from the $8.95 billion loss recorded in the final three months of 2009.

By Tony Aynsley

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