UBS ends state guarantee granted over Credit Suisse rescue
By Noele Illien
ZURICH (Reuters) -UBS won't need the government guarantee it secured to rescue failing rival Credit Suisse and has repaid billions of Swiss francs in emergency loans, freeing it of taxpayer-backed funding, Switzerland's biggest bank said on Friday.
The Swiss government provided 9 billion francs ($10.3 billion) of loss protection guarantees to UBS as part of the state-sponsored takeover of Credit Suisse earlier this year.
UBS also said it no longer needed a public liquidity backstop or a liquidity assistance loan of up to 100 billion francs from the Swiss National Bank (SNB) and backed by a federal guarantee.
«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 on Friday.
UBS shares were up 5% in early trading.
UBS also said that Credit Suisse had fully repaid an Emergency Liquidity Assistance Plus (ELA+) loan of 50 billion francs to the SNB.
As of July, a 43 billion franc emergency liquidity assistance loan with the central bank remained outstanding, a person familiar with the matter said.
The news should calm the political debate around taxpayers' exposure to UBS, said Vontobel analyst Andreas Venditti.
«The early voluntary repayment could potentially also help in other matters, such as negotiating the retention of the Credit Suisse Swiss business, in our view,» Citi analyst Andrew Coombs said.
UBS agreed on March 19 to buy Credit Suisse for a knockdown price of 3 billion francs and up to 5 billion francs in assumed losses in a rescue orchestrated by Swiss authorities with Switzerland's second-largest bank on the edge
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