Factbox: UBS, government agree on Credit Suisse loss guarantees - key points

Credit Suisse AG

09/06/2023 14:04

June 9 (Reuters) - UBS  UBSG.S  and the Swiss government
agreed on Friday on how they will share losses linked to the
bank's emergency takeover of Credit Suisse  CSGN.S , clearing
the way for the deal to close in the coming days.
    Here are some of the key points of the agreement: 
    
    * The guarantee covers a volume of around 44 billion Swiss
francs  ($48.85 billion), which corresponds to approximately 3%
of the combined assets of the merged UBS Group.
    * The specific portfolio details are confidential, but the
assets are mainly derivatives, loans, legacy assets and
structured products. UBS will report on the portfolio in more
detail when it publishes its second-quarter results, due on Aug
31. 
    * There is no set end date for the wind-down.
    * The assets covered by the loss guarantee are expected to
be revalued in the third quarter of 2023, after the takeover by
UBS. Losses arising from this revaluation are not covered by the
loss guarantee and will have to be borne by UBS. 
    * A net approach will be adopted meaning realised gains,
relative to the current Credit Suisse valuation, on the
realisation of assets will generally be offset against losses.
    * UBS will pay an initial set-up fee of 40 million Swiss
francs payable in two tranches to cover the set-up and advisory
costs.
    * The bank will also pay an annual maintenance fee of 36
million francs to cover certain ongoing federal costs, payable
in four instalments at the end of each quarter, with the first
payment due on 31 December 2023.
    * In the event of the guarantee being drawn, UBS will also
pay an annual risk premium of between 0% and 4% of 9 billion
francs, depending on the already realised losses and those still
expected. The greater these losses, the higher the respective
risk premium.
    * The agreement contains no statements on any federal
government participation in losses exceeding 14 billion francs. 
    * Credit Suisse's AT1 bonds are not covered by the loss
guarantee. Swiss regulators have written down about 16 billion
Swiss francs as part of the lender's rescue triggering hundreds
of lawsuits. 


($1 = 0.9008 Swiss francs)

 (Reporting by Noele Illien
Editing by Tomasz Janowski)
 ((Noele.Illien@thomsonreuters.com; +41 41 528 39 73;))