UBS ends Credit Suisse dependence on Swiss central bank loan
UBS on Friday said that it has ended a 9 billion Swiss franc ($10.27 billion) loss protection agreement and a 100 billion Swiss franc public liquidity backstop that were put in place by the Swiss government when it took over rival Credit Suisse in March.
UBS said the decision followed a «comprehensive assessment» of Credit Suisse's non-core assets that were covered by the liquidity support measures.
«These measures, together with the intervention of UBS, contributed to the stabilization of Credit Suisse and financial stability in Switzerland and globally,» UBS said in a statement.
Credit Suisse also fully repaid the emergency liquidity assistance loan of 50 billion Swiss francs to the Swiss National Bank in March, as Credit Suisse teetered after a collapse in shareholder and investor confidence, UBS confirmed.
«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 government said in a statement Friday.
«Furthermore, the Confederation earned receipts of around CHF 200 million on the guarantees.»
The Swiss Federal Council plans to submit a bill in parliament to introduce a public liquidity backstop (PLB) under ordinary law, while work continues on a «comprehensive review of the too-big-to-fail regulatory framework.»
The 9 billion Swiss franc LPA was intended to insure UBS on losses above 5 billion Swiss francs following the takeover, which was brokered over a frenetic weekend in March amid talks with the Swiss government, the SNB and the Swiss Financial Market Supervisory Authority.
«After reviewing all assets covered by the LPA since the closing in June and
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