UBS agrees with Swiss government on Credit Suisse loss guarantee (updated)

Credit Suisse AG

09/06/2023 09:19

(Adds details, comment, background)
    By John Revill and Noele  Illien
       ZURICH, June 9 (Reuters) - UBS  UBSG.S  has signed an
agreement with the Swiss government to cover up to 9 billion
Swiss francs  ($10.00 billion) in losses from its emergency
takeover of Credit Suisse  CSGN.S , the country's largest bank
and government said on Friday.
    As part of the deal, which was signed on Friday, UBS must
keep its headquarters in Switzerland, the government said.
     "To make the takeover possible, the government granted UBS
a guarantee for any losses incurred in the liquidation of Credit
Suisse assets," the government said in a statement.
    "The guarantee will only come into effect if the losses from
the liquidation of these assets exceed 5 billion Swiss francs
and is limited to a total of 9 billion francs," it added.
    It said the priority for both the federal government and UBS
was to minimise potential losses and risks to avoid making use
of the "to the greatest extent possible," 
    No mention was made by either UBS or the government about
how potential losses above the total agreed 14 billion francs -
5 billion from UBS and 9 billion from the government - would be
covered.
     Earlier this week, UBS said in a regulatory filing that any
further loss guarantees would require a separate legal basis in
the form of a parliamentary approval.
    Under the terms of the takeover orchestrated by Swiss
authorities in March as part of Credit Suisse's rescue, UBS
agreed to pay 3 billion Swiss francs and committed to cover the
first 5 billion francs in potential losses while the government
would shoulder up to 9 billion francs on top of that.

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