UBS cancels all public guarantees of liquidity and loss coverage for the purchase of Credit Suisse

2023-08-11 12:41:23

UBS announced this Friday its decision to “voluntarily terminate” all warranties agreed with the Government of Switzerland in the framework of the acquisition of Swiss creditincluding the Loss Protection Agreement (LPA) of 9,000 million Swiss francs (9,348 million euros), as well as the public liquidity support line for an amount of up to 100,000 million francs (103,865 million euros) with the Bank Swiss National (SNB).

In addition, Credit Suisse has repaid the Swiss central bank in full the emergency liquidity assistance loan (ELA+) for an amount of 50,000 million Swiss francs (51,932 million euros), received by the entity days before the agreement with UBS to reinforce its liquidity position, with the payment of a premium of risk of 476 million francs (494 million euros).

“The Confederacy did not have to take any loss derived from these guarantees”, the Swiss Government stressed after the entity’s announcement to terminate all support agreements, adding that with the termination of these guarantees, the associated financial risks will also have ceased to apply for the Confederation and taxpayers.

“Overall, the Confederacy got about 200 million francs Swiss funds (208 million euros) for the loss protection guarantee and liquidity assistance loans with default guarantee”, the Swiss government specified.

In this sense, UBS has explained that, after reviewing all the assets covered by the coverage agreement against losses and making the appropriate fair value adjustments, it has concluded that this no longer necessarynotifying the voluntary termination as of August 11, 2023 and for which it will pay the Government 40 million francs (41.5 million euros) as compensation.

Also, after Credit Suisse repaid all loans under the public liquidity support program at the end of May and after conducting a thorough review, UBS has decided voluntarily terminate the agreement with the Swiss National Bank as of August 11, 2023, noting that as of July 31, Credit Suisse had paid commissions totaling 214 million francs (222 million euros), including some 61 million francs (63 million euros) for the central bank and 153 million francs (159 million euros) for the Swiss Confederation.

“These measures, together with the intervention of UBS, contributed to the stabilization of Credit Suisse and financial stability in Switzerland and around the world,” the bank stressed.