Singapore sovereign fund changes strategy, selling UBS stake

Singapore sovereign wealth fund GIC is selling part of its stake in Swiss bank UBS at a loss, nearly a decade after it first invested in the bank at the height of the financial crisis.

"Conditions have changed fundamentally since GIC invested in UBS in February 2008, as have UBS' strategy and business," GIC Chief Executive Officer Lim Chow Kiat said early Tuesday (May 16) in a statement. "It makes sense now for GIC to reduce its ownership of UBS and to redeploy these resources elsewhere," Mr Lim said.

UBS is managing the sale, the Zurich-based bank said in an earlier statement. GIC said it previously owned 5.1 per cent of the Swiss bank's shares and that it will now own 2.7 per cent. GIC is selling 93 million shares through an accelerated bookbuilding to institutional investors.

The sovereign wealth fund was among the first big institutional investors to inject funds into UBS and Citigroup, after both were rocked by the global financial crisis.

It purchased more than 11 billion francs worth of UBS debt that converted into UBS shares at a price of between 51.48 Swiss francs and 60.23 Swiss francs a share. But GIC continued to nurse deep losses on the UBS investment, a situation made worse by several scandals that the Swiss bank was caught up in.

Last year, Singapore’s authorities fined UBS S$1.3 million for breaches, after a crackdown over money laundering activities related to the Malaysian sovereign fund 1MDB.

The crisis "offered a rare chance to take major stakes in the international banking sector," GIC said in its statement. The fund made a profitable investment in New York-based Citigroup Inc.

"The combined return on the UBS and Citigroup investments has been positive in mark-to-market terms," GIC added in a later statement.
GIC declined to comment on whether it still owned a slice of Citigroup, although Reuters data showed GIC was not listed as among the top 50 Citi shareholders on Monday.