UBS to close business in U.S. mortgage trading unit

Swiss bank UBS Group AG plans to wind down a business in its US mortgage unit that focuses on “to-be-announced” (TBA) trading, Bloomberg reported late last week.

The decision is part of UBS’s strategy to focus more on financing mortgage originators, the outlet said, citing an anonymous source discussing non-public information who asked not to be identified.

“We are fully committed to our lending business, which supports independent mortgage originators,” UBS spokesperson Erica Chase told Bloomberg in an email. 

The number of positions affected by the closure is unclear. However, the unit’s managing director, Michael Sudnow, will be leaving, according to Bloomberg.

UBS didn’t respond to HousingWire‘s request for comments.

Mortgage-backed securities in the U.S. are generally traded on a TBA basis. The term TBA is derived from the fact that the MBS that will be delivered to fulfill a TBA trade is not designated at the time the trade is made. 

In a TBA trade, the seller agrees on a price, maturity, coupon, and face value of the bonds without specifying what securities will be delivered to the buyer on the agreed upon closing date. 

The mortgage-trading decision comes on the heels of UBS working to integrate the operations of Credit Suisse Group AG.

Switzerland’s central bank offered Credit Suisse liquidity assistance on March 15 after its involvement in a series of corporate collapses spooked clients, who began withdrawing money, which led to a drop in share prices.

In less than a week, Swiss National Bank announced UBS would buy Credit Suisse for 3 billion Swiss francs – or $3.4 billion — in stock and assume a loss of as much as 5 billion francs. 

A recent filing from UBS showed the Swiss bank was rushed into buying its smaller rival, a deal in which UBS took a hit of about $17 billion due to the takeover.

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