UBS will substitute issuer of future loss-absorbing AT1 capital instruments & current & future TLAC-eligible senior unsecured...
March 02 2017 - 1:00AM
Business Wire
Regulatory News:
UBS (NYSE:UBS) (SWX:UBSN) has established UBS Group Funding
(Switzerland) AG, a wholly owned direct subsidiary of UBS Group AG,
to issue future loss-absorbing additional tier 1 (AT1) capital
instruments and total loss-absorbing capacity- (TLAC-) eligible
senior unsecured debt, which will be guaranteed by UBS Group AG.
UBS also intends to substitute the issuer of outstanding
TLAC-eligible senior unsecured debt, with UBS Group Funding
(Switzerland) AG replacing UBS Group Funding (Jersey) Limited as
the issuer. Outstanding loss-absorbing AT1 capital instruments
issued by UBS Group AG may in the future be transferred to UBS
Group Funding (Switzerland) AG, subject to further regulatory
review.
Under current Swiss tax law, capital instruments and debt issued
directly by UBS Group AG increase the overall tax burden for the
Group. However, this can be mitigated by issuing capital and debt
instruments through a subsidiary, with a guarantee provided by UBS
Group AG, as confirmed by the tax authorities. The Swiss Federal
Council has requested the Swiss Federal Tax Administration to
propose amendments to the current Swiss tax law in order to reduce
the additional tax burden on debt issuances by bank top holding
companies. When such changes become effective, we expect
loss-absorbing AT1 capital instruments and TLAC-eligible senior
unsecured debt to be issued directly out of UBS Group AG. At that
point, we also expect to substitute UBS Group AG as issuer of
outstanding capital and debt instruments issued by UBS Group
Funding (Switzerland) AG. Both loss-absorbing AT1 capital
instruments and TLAC-eligible senior unsecured debt are exempt from
withholding tax under Swiss law.
We expect the substitution of UBS Group Funding (Switzerland) AG
as issuer of outstanding TLAC-eligible senior unsecured debt to be
completed during the second quarter of 2017. The issuer
substitution will be carried out pursuant to the voluntary
substitution provisions provided in the terms and conditions of the
relevant instruments. Upon completion of the issuer substitution,
outstanding TLAC-eligible senior unsecured debt will continue to be
guaranteed by UBS Group AG, and investors' seniority of claim
against UBS Group AG will remain unchanged.
Supporting documents on UBS Group Funding (Switzerland) AG are
available under the "Disclosures for legal entities" section on
www.ubs.com/investors
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version on businesswire.com: http://www.businesswire.com/news/home/20170301006083/en/
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00orMedia contactSwitzerland: +41-44-234 85 00orUK: +44-207-567 47
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