UBS could stand to make an after-tax profit of up to €280m ($383m) from buying back four of its outstanding subordinated bonds at deeply discounted levels, potentially setting a precedent for other banks to follow suit and make gains from retiring junior debt.

In a note to clients today from BNP Paribas, its European banks analysts wrote that the buyback makes sense for UBS, in that it allows the Swiss bank to buy back instruments that "do not really matter" at discounted prices, and in so doing booking a profit which increases its core tier-one capital ratio - a key measure of a banks' financial strength.