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UBS Faces Crisis as First Brands Collapse Threatens $500M Exposure

First Brands' collapse puts UBS at risk of $500M losses. The bank must navigate this crisis while finalizing the sale of its O'Connor funds.

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In the picture there is a car and below the car some quotations are mentioned and it is an edited image.

UBS Faces Crisis as First Brands Collapse Threatens $500M Exposure

Swiss banking behemoth UBS grapples with a potential predicament as the implosion of First Brands Group looms. First Brands, a significant client, accounted for a substantial portion of Raistone's revenues, a technology platform heavily employed by UBS's O'Connor funds. UBS has substantial exposure to First Brands' debt and invoice-linked financing, with clients bracing for significant losses.

First Brands Group, a UK-based consumer goods company, has filed for administration, leaving a trail of financial distress. The company's troubles have hit UBS hard, with the bank's O'Connor funds having direct and indirect exposure totalling 30.5% to First Brands Group. This exposure is primarily through Raistone, a technology platform used by O'Connor's funds for invoice financing.

Raistone, founded by former Greensill employee David Skirzenski, processed a high volume of working capital financing for First Brands. Now, Raistone faces difficulties due to its exposure to First Brands' receivables, which is listed as 'undetermined'. Adding to the complexity, one of O'Connor's funds also held an equity stake in Raistone itself. UBS has more than $500 million (CHF400 million) at risk, with clients anticipating substantial losses. The fallout from First Brands' collapse threatens to drag UBS into a fresh crisis in the realm of invoice finance.

UBS's exposure to First Brands Group, primarily through its use of Raistone's platform, has put the bank in a precarious position. As the sale of UBS O'Connor to Cantor Fitzgerald progresses, the bank must navigate this crisis and mitigate potential losses for its clients. The exact extent of Raistone's exposure to First Brands' receivables remains undetermined, further complicating the situation.

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