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UBS and Swiss Government Provide Details on Loss Sharing Regarding CS Acquisition
June 12, 2023
UBS and the Switzerland government finalized details on how they would share losses related to the Credit Suisse takeover. The guarantee covers about ~CHF 44bn ($48.9bn), approximately 3% of the combined assets of the merged UBS Group. The assets were mainly derivatives, loans, legacy assets and structured products. The government’s assistance would kick-in after UBS covered the first CHF 5bn ($5.5bn) of losses. UBS will pay an initial set-up fee of CHF 40mn ($44mn) and also an annual maintenance fee of CHF 36mn ($40mn). Reuters reports that if a guarantee is drawn upon, UBS will pay an annual risk premium of between 0-4% of CHF 9bn ($10bn), depending on already realized losses and those that are to be expected. Specifically, Credit Suisse’s AT1s are not covered by the loss guarantee.
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