On Friday, UBS announced that the termination of the 9 billion Swiss franc ($10.27 billion) loss protection agreement and the 100 billion Swiss franc publicly liquidity backstop put in place by the Swiss government when it took over Credit Suisse in March. Credit Suisse also paid back the emergency liquidity assistance loan of 50 billion Swiss francs to the Swiss National Bank. This came as a result of a decrease in confidence in the company by shareholders and investors. The Swiss government stated in a press release Friday, "These measures, which were established under emergency law to ensure financial stability, are now finished and the Confederation and taxpayers will no longer be subject to any of the risks affiliated with these guarantees."
UBS announced on Friday that it had terminated a 9 billion Swiss franc ($10.27 billion) protection agreement and a 100 billion Swiss franc public liquidity backstop created by the Swiss government when it acquired Credit Suisse in March. UBS explained that its decision came after a thorough assessment of Credit Suisse's non-core assets, which were covered by the liquidity support measures. The bank also confirmed that Credit Suisse had fully paid back an emergency liquidity assistance plus (ELA+) loan of 50 billion Swiss francs that it obtained from the Swiss National Bank during a period of collapse in investor confidence. The Swiss government commented that the guarantees were cancelled, and taxpayers would no longer be accountable for any risks stemming from them. Additionally, the Confederation earned around CHF 200 million on the guarantees. As a result, the Swiss Federal Council intends to present a bill in parliament to introduce a public liquidity backstop (PLB) under ordinary law, while also conducting an exhaustive overview of the too-big-to-fail regulatory framework.
UBS was covered by a 9 billion Swiss franc liquidity protection agreement (LPA) following its takeover of Credit Suisse in March for a discounted price of 3 billion francs, which created a banking and wealth management giant with a balance sheet of $1.6 trillion. UBS determined that the LPA was no longer necessary, and gave a notice of voluntary termination effective 11 August 2023, paying 40 million Swiss francs to the Swiss Confederation for its establishment. The government additionally established a 100 billion Swiss franc public liability backstop on March 19, allowing the Swiss National Bank (SNB) to offer liquidity support to Credit Suisse if needed. As of the end of May, all loans drawn under the PLB had been returned and UBS had terminated the agreement after assessing Credit Suisse's funding situation. Credit Suisse paid 214 million francs to the SNB and the Swiss Confederation for a commitment fee and risk premium, including approximately 61 million francs and 153 million francs, respectively.
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