UBS Ends $10.3B Swiss Government Support for Credit Suisse Deal in 2025
UBS voluntarily terminates $10.3 billion Swiss government loss protection and $100 billion liquidity backstop, signaling strong asset health post-Credit Suisse merger.
In a significant move, Swiss banking giant UBS has voluntarily ended a $10.3 billion Loss Protection Agreement (LPA) with the Swiss government, originally established to safeguard potential losses from its acquisition of Credit Suisse. This decision reflects confidence in the stability and quality of Credit Suisse's assets following the merger.
Highlights
- UBS terminates a $10.3 billion government loss protection agreement.
- Ends emergency liquidity support of approximately CHF 100 billion provided by the Swiss National Bank.
- Repayment of all emergency loans, including a CHF 50 billion Emergency Liquidity Assistance Plus (ELA+) loan.
- Investor optimism grows as integration of Credit Suisse progresses smoothly.
The termination of the LPA and the Public Liquidity Backstop (PLB) with the Swiss National Bank underscores UBS’s assessment that the $38 billion in assets acquired are healthier than initially anticipated. UBS also confirmed repayment of all emergency measures and loans related to the acquisition.
The $3.24 billion merger, facilitated by the Swiss government during the banking turmoil in March 2024 following Silicon Valley Bank's collapse, marked a pivotal consolidation in the Swiss banking sector. Credit Suisse had faced multiple challenges, including a spying scandal, $5.5 billion losses linked to the Archegos hedge fund collapse, and executive turnover. UBS recently settled $387 million in fines related to misconduct tied to the Archegos incident.
Following the announcement, UBS shares surged 4.5%, reaching their highest level since November 2014, as investors anticipate robust second-quarter earnings scheduled for August 31, 2024.
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