No exit: The problems facing UBS in its fixed income retreat

UBS is shutting down large chunks of its fixed-income business – the first dealer to announce such a dramatic step – but some of its now-unwanted trades could be difficult to exit. Risk looks at the challenges involved in unwinding a capital- and funding-intensive business. By Matt Cameron

hell

"Derivatives businesses are like hell: easy to enter and almost impossible to exit,” Warren Buffett said in 2002, as Berkshire Hathaway tried to get rid of the Gen Re Securities derivatives portfolio it acquired as part of a bigger deal in 1998. That portfolio contained 23,128 contracts with more than 600 counterparties. It took nearly five years to exit the bulk of the portfolio, costing Berkshire more than $400 million, but even today there are still some live trades on the books.

For Buffett

Only users who have a paid subscription or are part of a corporate subscription are able to print or copy content.

To access these options, along with all other subscription benefits, please contact info@risk.net or view our subscription options here: http://subscriptions.risk.net/subscribe

You are currently unable to copy this content. Please contact info@risk.net to find out more.

Sorry, our subscription options are not loading right now

Please try again later. Get in touch with our customer services team if this issue persists.

New to Risk.net? View our subscription options

Most read articles loading...

You need to sign in to use this feature. If you don’t have a Risk.net account, please register for a trial.

Sign in
You are currently on corporate access.

To use this feature you will need an individual account. If you have one already please sign in.

Sign in.

Alternatively you can request an individual account here