UBS announced that it will wind down the O’Connor hedge‑fund unit after the unit suffered losses from the Chapter 11 bankruptcy of First Brands Group, a U.S. auto‑parts supplier that filed for protection in September 2025.
The O’Connor funds had a $500 million exposure to First Brands, of which analysts estimate $350 million is likely lost. UBS is liquidating the funds to mitigate further risk and protect its capital base, a move that underscores the concentration risk in its alternative‑investment portfolio.
The liquidation also impacts UBS’s planned sale of the O’Connor unit to Cantor Fitzgerald. Cantor has indicated it will renegotiate the terms of the deal, potentially removing the problematic business unit or reducing the purchase price, which could delay or alter the transaction that was expected to close in Q4 2025.
UBS’s Q3 2025 earnings were strong, with a net profit of $2.48 billion, up 74% year‑over‑year, demonstrating the bank’s overall resilience. The O’Connor losses are a localized issue that does not threaten UBS’s balance sheet but may affect investor confidence in the asset‑management arm.
The First Brands exposure has drawn attention to UBS’s risk‑management controls, especially in light of the ongoing integration of Credit Suisse. The event highlights the need for tighter concentration limits and better oversight of supply‑chain‑finance structures that can obscure true debt levels.
Management comments reflect the situation: CFO Todd Tuckner said UBS is working through whether First Brands positions will be included in the sale, while a UBS spokesperson stated the bank is taking steps to protect clients and maximize recovery of the remaining First Brands‑related positions through the complex bankruptcy process.
While the liquidation may dampen short‑term sentiment around UBS’s asset‑management business, the bank’s broader financial performance and progress on the Credit Suisse integration suggest that the impact on overall earnings is limited.
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