UBS bid for the Swiss consumer lending business which is now in the hands of Gen for auction. The deal may possibly end up with 1.5 billion Swiss francs equivalent to $1.6 billion.
The Swiss bank UBS story:
Swiss bank UBS is one of the two parties to the auction.
By the end of the first quarter the deal would be finalized.
GE, the Zurich based bank have a manpower of 700 people and 25 branches spreading all over the world. The bank is involved in the activities like dealing in personal loans, giving loan for vehicles, availing credit cards and insurance services. In 2011 Swiss consumer lending is made a gain of 135 million francs while the lending is predicted with a market value of 15 billion francs.
Mr. Jeff Immelt, the Chief Executive Officer of GE is selling $ 1.5 billion stake in Bank of Ayudhya, the fifth biggest bank of Thailand.
From the very early GE’s consumer credit business is being sold in Austria and Germany to Spanish bank Santandar.
USB into loan and mortgages:
If USB is buying the Business, then it will be the biggest deal in the history of the bank since its early fiscal crisis.
In 2006 USB acquired a bank named Brazilian Investment bank pactual at a cost of about $3.1 billion but in order to raise capital compelled to sale it later.
USB’s acquisition of the GE money bank is backed with the intention to strengthen its own economy in the field of investment banking.
USB now shifts its fund from fixed income yielding business to other high income gaining business, in order to raise its home market fund. Its plan is to invest 1.5 billion francs in next 3 years, in investment sector through out the world.
As in the last year the bank suffered a heavy loss of $2.3 billion and due to that, its got refrained from the acquisition of any investment bank as per FINMA, the Swiss Financial Market Supervisory Authority.
So to be conclude, it can be said that USB which is involved in retail banking activities and deals with loan and mortgages is not good at handling the financial affairs of the investment sector.