The logo designs of Swiss banks Credit Suisse and UBS on March 16, 2023 in Zurich, Switzerland.
Arnd Wiegmann|Getty Images News|Getty Images
UBS on Friday stated that it has actually ended a 9 billion Swiss franc ($1027 billion) loss security arrangement and a 100 billion Swiss franc public liquidity backstop that were put in location by the Swiss federal government when it took control of competing Credit Suisse in March.
UBS stated the choice followed a “comprehensive assessment” of Credit Suisse’s non-core possessions that were covered by the liquidity assistance steps.
“These measures, together with the intervention of UBS, contributed to the stabilization of Credit Suisse and financial stability in Switzerland and globally,” UBS stated in a declaration.
Credit Suisse has actually likewise totally paid back an emergency situation liquidity help plus (ELA+) loan of 50 billion Swiss francs acquired from the Swiss National Bank in March, as the lending institution teetered on the edge after a collapse in investor and financier self-confidence, UBS verified.
“These measures, which were created under emergency law to preserve financial stability, will thus cease to exist, and the Confederation and taxpayers will no longer bear any risks arising from these guarantees,” the Swiss federal government stated in a declaration Friday.
“Furthermore, the Confederation earned receipts of around CHF 200 million on the guarantees.”
The Swiss Federal Council prepares to send an expense in parliament to present a public liquidity backstop (PLB) under common law, while work advances a “comprehensive review of the too-big-to-fail regulatory framework.”
The 9 billion Swiss franc LPA was planned to guarantee UBS on losses above 5 billion Swiss francs following the takeover, which was brokered over a mad weekend in March in the middle of talks with the Swiss federal government, the SNB and the Swiss Financial Market Supervisory Authority.
The emergency situation rescue offer saw UBS obtain Credit Suisse for a discount rate cost of 3 billion Swiss francs, developing a Swiss banking and wealth management leviathan with a $1.6 trillion balance sheet.
“After reviewing all assets covered by the LPA since the closing in June and taking the appropriate fair value adjustments, UBS has concluded that the LPA is no longer required,” UBS stated.
“Therefore, UBS has given notice of voluntary termination effective 11 August 2023. UBS pays a total of CHF 40 million to compensate the Swiss Confederation for the establishment of the LPA.”
The 100 billion Swiss franc public liability backstop was developed on March 19 by the Swiss federal government and enabled the SNB to offer liquidity assistance to Credit Suisse if required, financed by a federal default assurance.
UBS verified on Friday that all loans drawn under the PLB were totally paid back by Credit Suisse by the end of May, which the group had actually ended the PLB arrangement after an evaluation of its financing scenario.
“Through 31 July 2023, Credit Suisse expensed a commitment fee and a risk premium totaling CHF 214 million, including approximately CHF 61 million to the SNB and CHF 153 million to the Swiss Confederation,” UBS included.
