May 7, 2009 / 6:46 PM / 10 years ago

DJ-AIG commods index becomes DJ-UBS in acquisition

NEW YORK, May 7 (Reuters) - Swiss bank UBS AG UBSN.VX said on Thursday it has finished acquiring U.S. insurer AIG’s stake in the DJ-AIG Commodity Index .DJAIG and renamed the business Dow Jones-UBS Commodity Indexes .DJUBS.

Some 13 employees of AIG Financial Products Corp, the AIG unit that used to run the commodity index with Dow Jones, will move to UBS to continue their work, UBS said in a statement.

The Swiss bank said in January it would pay $150 million for the acquisition from AIG as part of a plan to overhaul its investment banking division.

UBS had expanded into commodities in recent years but remained a second-tier player behind banks such as Goldman Sachs (GS.N), Morgan Stanley (MS.N) and Barclays (BARC.L).

In January, it divested some of its commodities businesses to Barclays and exited from markets like power, gas, agriculturals and base metals after suffering huge losses from the financial crisis.

But it held on to precious metals and index and exchange-traded commodities, which it said were integral to its wealth management operations.

It also decided to expand into the commodities index business which it called “consumer driven”. Aside from the venture with Dow Jones, UBS has another commodity index called the UBS Bloomberg Constant Maturity Commodity Index.

“Our clients now have a wide variety of choices in accessing commodity indexes,” Jason Barron, global head of equity derivatives at UBS, said in Thursday’s statement.

AIG Financial Products used to sponsor and manage the DJ-AIG commodity index, which tracked 19 futures markets in the energy, metals and agricultural sectors.

But like UBS, the U.S. insurer has been wracked by financial woes, sparking concerns among some investors about counterparty risks in trades involving the firm.

In September, at the height of the turmoil at AIG, several investment funds in Japan reported they could not trade the DJ-AIG Commodity Index due to temporary unavailability of prices from the local provider of the index.

Some investors had also moved to redeem or limit their exposure to the index at that time. (editing by Jim Marshall)

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