UBS, the sub-prime stricken European banking group, has successfully offloaded about $22 billion (£11 billion) worth of mortgage securities for $15 billion to BlackRock and lent the US money manager more than three quarters of the total purchase price.

Switzerland's largest bank, which has written down $37 billion from the credit crunch so far, has taken a hit of $7 billion on the value of the securities, mostly sub-prime American mortgage assets. Their value for sale purposes was put at $15 billion.

The deal means UBS receives about 68 cents on the dollar against the value of the securities.

It reduces its exposure to US "toxic" assets to about $17 billion, although the bank owns a further $25.4 billion of US property, student loans and other capital market securities.

UBS said most of the securities that were sold were sub-prime American residential mortgages or so-called "Alt-A" mortgages, which are on the cusp of this rating.

The bank said today that it had provided a collateralised loan to BlackRock of about $11.25 billion to part-finance the sale of the securities.

BlackRock paid the remaining $3.75 billion after raising fresh equity from investors.

The Swiss bank has been the hardest hit of all Europe's banks as a result of its exposure to American homeowners with patchy credit histories or repayment problems.

It has cut its exposure to sub-prime "toxic" securities by 60 per cent.

It is understood that if the value of the fund improves beyond an agreed level, UBS can claim a share of future profits.

After plunging into an annual loss last year, UBS has overhauled its executive team and installed a new chairman and chief executive, as well as reinventing its risk techniques.

It posted a further loss for the first quarter this month and announced 5,500 job cuts.

About 2,600 jobs will go in UBS's investment bank, blamed for most of the writedowns. A further 2,900 jobs will go in other parts of the business.

There has been speculation that the bank, which operates the world's largest wealth manager, is vulnerable to a bid in the light of its problems.

Barclays, the UK's third-largest bank, has been tipped as a potential bidder.

Last month UBS shareholders approved a capital increase of SwFr15 billion in the wake of controversial investments by two sovereign wealth funds.

UBS shares fell more than 1.6 per cent, down SwFr0.52 at SwFr31.74.

Times Recommends

• Lenders face huge hit on mortgage fraud
• Mortgage rescue fund at the ready
• Zoom airline collapses and halts all flights