UBS to buy back toxic asset fund for $3.76bn UBS will spend $3.76bn to buy back the fund set up to deal with its toxic assets during the financial crisis, in a move that will boost the Swiss bank's capital position and help draw a line under one of the more difficult episodes in its recent history. From 2008, UBS transferred a total of $38.7bn of toxic securities to a so-called stabilisation fund owned jointly with the Swiss National Bank, as it fought to stave off collapse under the weight of more than $50bn in mortgage-related losses. The SNB provided the Stabfund with a loan to cover the troubled assets as they were run down. Once this was repaid in August, UBS was entitled to buy back the fund for $1bn plus half of the fund's equity, and the SNB said Friday that it had agreed to do so. UBS declined to comment. As well as laying to rest the ghosts of the past, the purchase provides UBS with a timely boost to its capital and leverage ratios. Switzerland's largest bank has made big efforts to strengthen its capital position, but received a setback last month, when Finma, the Swiss financial watchdog, imposed a 50 per cent add-on to UBS's risk-weighted assets. UBS said at the time that the move would lop about 130 basis points off its core tier one capital ratio - a closely watched measure of financial strength - which stood at 11.9 per cent at the end of September. However, that reduction will now be largely offset by the acquisition of the stabilisation fund, which UBS reckons will add about 100 basis points back on its core tier one capital ratio. UBS also expects the purchase to improve its leverage ratio - a measure of a bank's capital in relation to total assets - by around 25 basis points. UBS's leverage ratio was 3 per cent at the end of September, but the bank needs to increase it to more than 4 per cent by 2019. The SNB said that the transfer of the Stabfund to UBS "represents the successful conclusion of a challenging undertaking and one which, for the SNB, was out of the normal run of business." The central bank said that, in addition to its $3.76bn share in the equity of the fund, it had also received interest income of $1.6bn over the term of the loan. "However, attaining a profit was never an objective in its own right," the central bank added. The prime reason for the establishment of the StabFund was its contribution to strengthening the Swiss financial system. Shares in UBS were down slightly at SFr16.56 in early morning trading in Zürich.