Swiss banking giant UBS Group AG has finalized the sale of Credit Suisse’s mortgage servicing arm, Select Portfolio Servicing (Sps Servicing), to an investor group spearheaded by Sixth Street, according to sources familiar with the transaction. Davidson Kempner Capital Management, another investment firm, is participating as a co-investor in this acquisition.
While representatives from Credit Suisse, Davidson Kempner, and Sixth Street have all declined to officially comment on the deal, initial reports identifying the buyers originated from anonymous sources cited by Bloomberg.
Industry insiders have indicated that Salt Lake City-based SPS Servicing is a reputable and long-standing player in the mortgage servicing sector. However, Credit Suisse had been actively seeking a buyer for the company for some time. This move aligns with a broader trend in the banking industry where institutions are reducing their exposure to mortgage servicing rights (MSRs). This reduction is largely driven by anticipated increases in capital requirements and associated risks, as seen with institutions like Wells Fargo scaling back their correspondent channels.
UBS, which acquired Credit Suisse Group in June 2023, thereby becoming the parent company of SPS Servicing, confirmed the divestiture of its U.S. servicing operations on Wednesday. The announcement, made during an analyst call, did not disclose the names of the acquiring parties nor the specific financial terms of the agreement at that time.
Todd Tuckner, UBS Chief Financial Officer, stated during the call that the sale, projected to close in the first quarter of 2025, is strategically advantageous for UBS. It is expected to yield a $250 million reduction in annual operating costs and decrease risk-weighted assets by $1.3 billion. CEO Sergio Ermotti further elaborated in a media briefing that a “consortium” was the purchaser. Prior to the official announcement, Reuters initially reported details of the impending transaction.
Ratings agency Fitch Ratings noted in a published report that SPS Servicing has been active in the residential mortgage servicing market since 1989 and in servicing residential mortgage-backed securities (RMBS) transactions since 2000. Credit Suisse’s acquisition of SPS dates back to 2005. Following UBS’s rescue of Credit Suisse last year, SPS was integrated into UBS’s division focused on non-core and legacy assets.
Data from Inside Mortgage Finance (IMF) positions SPS Servicing as the 20th largest primary mortgage servicer in the U.S. as of June, managing a substantial $166.7 billion in unpaid principal balance (UPB). Furthermore, SPS’s owned servicing portfolio was valued at $45 billion at the end of June, ranking it 36th according to IMF.
In a separate development from September 2022, SPS Servicing publicly announced an agreement to acquire select assets from Rushmore Loan Management Services, a Texas-based entity. The integration of Rushmore as a subsidiary was projected to expand SPS’s operational capacity to over 1,600 employees, servicing approximately 1.4 million loans, as per the companies’ joint announcement at the time of the deal.
